Nowadays everyone knows how to earn money but not everyone knows how to manage their money properly. Are you smart in managing your money/finances? If you have all the qualities mentioned below, you are Financially Smart and will be RICH soon. Let’s find out whether you are Financially Smart or not.

1. YOU DO NOT SPEND MONEY TO BUY UNNECESSARY THINGS

Financially Smart people spend money only when it is really necessary. For example, if their current mobile is working well without causing any problem, they will not buy any brand new mobile just to show off. Financially Smart people do not spend their hard-earned money on less important and unnecessary things.

2. YOU MAKE A BUDGET EVERY MONTH

Financially Smart people make a budget every month and plan their expenses accordingly. They plan where they will be spending money at the beginning of the month and stick to their plans. This practice helps them to manage their money properly.

3. YOU NEVER BUY LUXURY ITEMS ON LOAN

These days people use to buy luxury items like new iPhones, dresses, bikes, jewelry, etc on loan just to show off. But financially smart people do not buy all these luxury items which act as liabilities (Things that move money out of pocket) for them. And about buying these liabilities on loan, they never do this mistake.

4. YOU HAVE AN EMERGENCY FUND

In this fast-changing world, you never know when you will lose your job. So it’s very necessary to have an emergency fund as a backup. To know how much amount you exactly need for an emergency fund use the following technique.

       Monthly Income * 6 = Emergency Fund

       Example:-

                   $1000 * 6 = $6000

Multiply your monthly income by 6, you will get the emergency fund you need. For example, if your monthly income is $1000, multiply it by 6 so your emergency fund will be $6000. Having an emergency fund will allow you to sustain your monthly expenses even if you lose your job and provide you some time to find a new job or develop a new source of income.

5. YOU HAVE MORE THAN 0NE SOURCES OF INCOME

Financially Smart people have more than one source of income. Financially smart people keep adding new sources of income. They make money from lots of sources. They are not completely dependent on their job. Financially Smart people make money from other sources like stocks, real estate, side business, etc.

CONCLUSION

Being financially smart or Rich is not a day game. It’s a long game that requires lots of hard work, patience, consistency, and continuous learning. So keep learning new things every day. Educate yourself on topics related to money and finances. I hope the above list will help you in educating yourself financially to some extent.

Which of the above-mentioned point did you find more helpful and are going to use in your real life to level up your money game?