Seven steps to financial stability

Do you know January is recognised as Financial Wellness Month? Yes, it is. It is the month dedicated to promoting awareness and understanding of financial health and well-being. As the beginning of a new year, January also offers an opportunity for individuals to make resolutions regarding their financial goals and habits.

However, financial stability is beyond the ability to afford luxuries rather it is about being confident in your financial situation. And no, financial stability is not just for wealthy people — it is achievable for you as well, starting with small steps and a combination of knowledge and discipline.

Without further ado, here are actionable tips that can guide you on the path to financial stability.

• Set financial goals

It is said that if you fail to plan, you plan to fail. This is also applicable to your finances, so to avoid failure you have to plan for a better financial future.

Before setting your financial goals, take time to consider your overall financial picture and desires. Ask yourself questions including ‘What is your financial well-being currently?’ ‘Where do you want it to be in a week, month, or five years from now?’

Answer these questions truthfully and pen down the answers. This will help you come up with clear and achievable goals.

Your financial goal could be to cultivate the habit of saving; saving towards a particular course like a house, education, or retirement. Having specific objectives helps you stay focused and motivated, so make your goals personal.

• Create a realistic budget

Creating a realistic budget that matches your financial goal is a major step to financial stability.

So you start by listing out your monthly income and expenses. You allocate funds to all areas of your financial life including necessities, savings as well as debts if there are any.

Tracking your expenses regularly is necessary. It helps monitor your spending pattern, avoid overspending, and use it for further financial planning.

Nobody’s financial budget is the perfect blueprint, so create your own to match your income, expenses and goals.

• Become financially literate

To become stable in a field, you need to continuously educate yourself about the field.

Yes, to be financially stable you need to be financially literate. Get informed about personal finance, and understand financial basic concepts and investment strategies.

Take the time and effort to become knowledgeable in personal finance; read books and ask questions from professionals. Continuously educating yourself will help you make informed financial decisions that will help achieve your goals.

• Save and invest wisely

If you want to be financially stable, you have to plan for days ahead of you by saving and investing.

Save towards retirement and emergency funds. As a young person, you’re wondering why you should save for decades away, right?

However, taking a few steps now to start saving will benefit you in the long run. As it will significantly impact your future and help you retire comfortably. Prioritize your retirement now and you will thank yourself in the future.

You can also explore investment options based on your financial goals and risk tolerance. Consulting a financial advisor is quite important to make informed investment decisions that align with your goals.

• Manage and reduce debt

It will be easier to become financially stable when there is little or no debt. So work towards paying off your debts quickly. If the debts are high-interest, you can create a plan to systemically pay the debts off so it won’t affect your overall finances.

You should also avoid falling and accumulating new debts after paying off the existing ones. Living debt-free is not as hard as you think it is. You just have to be disciplined, live within your means, and avoid overspending.

Living within your means will make you financially flexible, providing more resources for saving and investing.

• Earn from what you enjoy

One of the easiest ways to secure financial stability is by turning your passion into a source of income.

It is also not a bad idea if you have more than one stream of income. One could be from a corporate job and the other from a skill or hobby you enjoy. This will help you earn extra income on top of your steady monthly income.

Finding ways to monetize your passion can lead to sustainable income. You would not only make income, but it will also provide you with a sense of fulfillment.

• Regularly review your finances

Schedule periodic reviews of your financial situation and status.

Assess the progress you have made toward goals and adjust your budget as well as your goals as needed.

Remember, your finances are personal, so tailor it to favor you and your aspirations, not anyone else’s.