Learning to manage your finances takes time, effort, and lots of practice. If you would like to acquire wealth and independence at a later point in your life, there is no better time to start than now. It doesn’t matter how young or old you are. If you are interested in making an investment, you must first learn how to budget and save. The key is knowing how to make financial goals and having the determination to meet those goals.
Take control of your financial future
The first step is assessing your financial situation and seeing yourself within the context of a bigger picture.
Some of the questions you will probably ask yourself may include the following: how much do you earn in a year and how much do you expect it to grow in the following years? How much can you actually save in a specific period of time?
If all you can answer to the last one is “not enough,” then it is up to you to find out what kind of changes you can and are willing to make in order to spend less and save more. Do you have a debt problem from having mismanaged your credit cards or are currently paying any outstanding loans/ mortgages? Getting away from debt would be one of the first things you need to focus on toward achieving good financial health.
Get into the mindset that every ringgit you earn and spend makes an impact. You have to learn to be accountable for all your finances. Sort your priorities and cut down on areas where you can. By knowing exactly where your money goes and avoiding having to spend on things or items you can do without (for instance, interest on credit card purchases), you get to be more in control of your finances and are more likely to succeed in meeting your goals.
Once you get into the habit of saving, you will notice how your cash will begin to accumulate. Where you put your savings is also important as there are vehicles on which you can earn interest on your savings, like deposit accounts or a money market account–which are already forms of investments if you consider and look at them carefully. In any case, a savings or emergency fund may serve as your safety net for when unexpected expenses arise.
Start investing
The idea behind making an investment is, of course, to make your money grow, and possibly reach, your wealth fund target so you can live comfortably in retirement. If things go really well, you may even have enough cash to pass on to your future children. But before you decide on what type of investment to make, you will have to assess your risk tolerance, which is the balance between your desire for reward and your ability to take risks.
Once you are able to determine your risk tolerance, then you can start looking around for a type of investment you are prepared to make. A diverse investment portfolio, which means putting your money in different types of investments, is recommended by financial experts as it balances out the risks and will be more likely to give you maximum returns. You can refer to several resources and books on personal finance and investment to find out more about the different types of investments and how to finally get started.
About the Author:
This article is prepared by Compare Hero for Stock Market Talks. Compare Hero is Malaysia’s leading financial comparison website, which allows users compare a broad range of financial information for free. In this way, Malaysians will be equipped with financial knowledge which leads to better financial decisions in life.
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