Personal Finance

Personal Finance Mantras That Really Work

Personal Finance Mantras

Mantras, manifestation and visualization are quite new concepts for many people. These things can change your life for good at no cost. All you have to do is stay determined and stick to your thoughts, and that would be enough. Mantras can evolve as an important part of anyone’s life, and one has to understand how it will actually influence them. In this article, we are going to talk about personal finance mantras that work.

The first thing you have to be clear about is that these mantras are not magical, and nothing happens unless you trust the process and follow it. Changing your thoughts towards money and understanding how you are now behaving with it will help in becoming a better person altogether. This is a small thing that can bring a big and impactful change in your life.

Apart from changing your mindset, you have to follow certain mantras that will help in improving your overall financial lifestyle. Creating various means of wealth generation, maintaining your finances perfectly while saving and investing a significant part of the money will change your entire life. Make sure to follow these mantras in the article, and you will see how impactful they can be in your life. 

Know Your Money Mindset

Knowingly or unknowingly, we all have a money mindset. It is a subconscious thought process, and one needs to understand where you stand with your money mindset. There are only two types of money mindsets to get started with-

  • Abundance mindset
  • Scarcity mindset

Abundance Mindset

The abundance mindset is the positive approach towards money. According to you, money is constantly flowing, and a lot of money is running around. This is an optimistic approach towards money and something that we all should have. I know that this is a world centred around negativity; however, do not let it affect your mindset. Cultivating a positive approach towards money is something that will come in handy at any point in time.

Scarcity Mindset

It is also something that’s quite common. A lot of people think that money is a limited resource, and you may be one of them. According to you, money around the world is never enough, which is the pessimistic mindset towards money. This can happen for people who never grew up with money or have been in various tight on budget situations. 

Knowing the kind of money mindset you have will help in shifting your gear towards the money. If you want to have long-term financial success, then you need an abundance mindset. There can be ups and downs in your life but never let it be the reason for your negative outlook towards money.

Change Your Mindset

Now that you know what your approach towards money is, it is time for you to change it if you are on the scarcity mindset side. No, it is not possible to make a 360-degree shift overnight. From struggling to make your ends meet to thinking that wealth present in the entire world is flowing towards you would sound a lot fake, to be honest.

It is important to make small changes. Take it one day at a time and think about all the things that you can achieve if you have money at your disposal right now. The dreams that you can make true, the vacation you were planning to have, and the house you wanted to buy for a long time, changing your mindset will immediately help you make things come true. 

Once you build the right kind of mindset, it is time to take care of your finances. The next mantras in this article are going to focus on it only.

Separate Personal and Business Accounts

This is for all the businesswomen out there. It is important to have two separate accounts for your business and personal expenses. There are many situations where one mixes up their business and private money. This is a big problem, and one has to ensure they are separate. For every businesswoman, having two separate accounts for your personal finances and business is a favour that you do for yourself. Please do not skip it by any chance.

Plan the Cash Flow Correctly

Again this is for the businesswomen and freelancers out there. If you are not living on a fixed income, then you need to keep a check on the cash flow. Be it a business or freelancing, there are times when the cash you have to get from customers or clients gets delayed, and these are the times when you fall short on cash.

In order to prevent such situations, keep a check on your cash flow constantly. 

Pay Yourself First

If you own a business, then this is for you.

Often we see in business people not paying themselves. Remember, it is important first to pay your own salary. If you don’t allocate some amount aside for your salary, you will dig into the business account for the money. This will hamper the cash flow. However, if you pay your own salary first, you will be living on it only, and your entire money present in the business account will be spent only for the business.
It is a way to keep both your personal and business finances in check.

Increasing your earnings means

When you want to save more, you have to earn more. There is no other way. You may say that I will do some cost-cutting. No matter how much cost-cutting you do, there will come a time when you don’t have any other cost-cutting option left.

Hence, it is important to increase your earning means. This doesn’t mean you have to stress yourself with work all the time. Just focus on different ways which can fetch you money. From a small hobby like making scrunchies to picking up a freelancing project that is related to your profession, there are so many ways to earn. 

If you are unable to work for more time, then focus on making your money work for you. This means you can start investing in the stock market, mutual funds, etc. This will help in gaining significant returns on your investments. However, always think before making any investment and do ample research. Multiple streams of income is not a luxury, and it is need of the hour. 

Spend Less than What you Make

Credit cards may tempt you, and no interest EMIs may help you get the product you have been eyeing for easily, but are they worth it? There are so many people who spend most of their time clearing their EMIs, and it shouldn’t be the same in your case. Always remember to spend less than your salary.

Most people aim to save at least 20% of their earnings, and I would suggest saving as high as 30%. Divide your needs, wants and savings and make sure that you are saving at least 30% on a monthly basis. In this 30%, some amount will go for your emergency fund while the remaining must be invested somewhere safe where you can compound the money.

I know you must be thinking about the need for compounding, but trust me, it is the need of the hour. The power of compounding is not something that can be underestimated. 

The Power of Compounding

Compounding is something that we have all been listening to since our childhood. From school math to investment, compounding has been a big and most important lesson we all have learnt. There are so many people who underestimate the power of compounding.  

Let us take the example of two friends- Sameer and Kareena. Sameer started investing at the age of 30 and invested 1000 rupees per month. The investment period was 30 years, and in total, he invested 3,60,000/-. The expected return was 8%. The total interest he earned is 1,140,295, and the amount he accumulated at the age of 60 is 1,500,295/-.

Now let us talk about Kareena. She started investing at the age of 4 and invested for 15 years. She invested 2000 per month, making it a total of 3,60,000/- which is similar to Sameer. The rate of return was 8%, and she earned 336,690. Her total earnings after 15 years were 696,690.

This is the power of compounding and the importance of starting early. Even though you have a small amount, start investing now. It is going to come in handy to you at one point. Starting early can help you in retiring early too. 

Plan Emergencies

Having a rainy day fund is a necessity. It is as important as a monthly salary. Save the amount somewhere that is easily accessible. Apart from a rainy day fund, it is important to have insurance too.

There are so many people who skimp off the insurance for so many reasons; however, always remember that this insurance can come in handy in various emergency situations, so do not ignore insurance. It is a small premium that you are paying for your own financial support in the future.

Proper Budgeting

You should have a proper budget plan in place to get yourself started. Devise a proper plan and stick to it. Start by calculating your take-home salary and all the other ways from where you get the payments. Now, as said earlier, divide your spendings into needs, wants and savings.

Keep the saving money aside, or even better, deposit it into your savings account or in any other investment that you are doing immediately after receiving it. This will prevent you from spending that money.

Now, plan your rent, groceries, EMIs, and other bills. All of these come under the needs section. Then there is the wants section which comprises your luxuries. The bag you have always wanted to purchase, the vacation you wanted to take for a long time, spend your money for things that make you happy. 

This is just a rough budgeting idea to make you understand how to do it. Budgeting is the biggest personal finance mantra. 

Credit History Matters

Remember that your credit history is the first thing that banks and financial institutions will check to issue you personal, vehicle, home loan, and credit cards. It is going to follow you everywhere.

So, it is the first thing that matters, and you have to focus on improving the same. You can start off by clearing your credit card payments and any other existing loans. Clear them as soon as possible to increase your credit score.

Higher Returns- Higher Risks

If you want to get more returns, then you should be ready to take higher risks, especially in the stock market and mutual funds. If you are someone who wouldn’t want to take high risks, then invest accordingly. Another thing that you have to keep in mind here is that you never ever invest or trade with the borrowed money.

Renting is Always a Better Option

Having a house is a dream for middle-class people, and trust me, so many businesses thrive on this very dream. People always think that security and safety come from having your own home but, think about the amount you are paying for it. The down payment, EMI, maintenance charges and many more. 

Owning a home is not a necessity, and you shouldn’t waste your entire life spending on that home itself. So many people spend their entire life repaying their home loans, so they do not get sold on the middle-class dream home concept. It is okay to live in a rented house and take care of your retirement.

Wrapping Up

Personal finance is a tough nut to crack, and there is no wonder about it. However, if you start developing an abundant mindset, you are half already there. Once your mindset is aligned with money-making, you will have to focus on means of money-making followed by how to save it. This step by step procedure will help in creating a financial discipline.

Once you develop the financial discipline, there is no going back. So, start basic, and scale-up be it making, saving or investing the money.

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