Mastering the art of debt-free living is a good thing. This is because it is easy to fall into the pit of debts, and go deeper. You have your dreams of being able to buy a house, save for emergencies or retire. You won’t be able to do any of these if you are living in the shackles of debt. You have to learn to manage your funds so you don’t fall into the bondage of debts. In this writing, we will discuss the paths you can take to live a Debt-Free life.
Budget reduces debt.
You must create a budget and stick to it. With budgets, you will be able to know if you are spending more or less than your income. Tracking these expenses will help you stay on track with your financial dreams. The budget will help you determine how much you have at hand, how much to spend, and create provision for saving towards that goal.
Read also: Budget brings you closer to your financial dreams
You must create a budget for a lot of things, such as food, utility bills, travel, investment, debts, etc. You should avoid at all costs spending on impulse, and buying things when there isn’t enough money. This will keep you away from debts as much as possible. If you want to buy that thing, you just have to adjust your budget and allocate funds for it.
Avoid debt by saving a certain percentage of your money
There are no two ways about this, you need to learn to save a certain percentage of your income. This will give you something to use as an investment or attain to emergencies. If you have financial goals, savings towards them will go a long way to help you realize that dream. Set up an automatic transfer to your savings account, so that you will not be tempted to touch those funds. Your bank will automatically debit your accounts and transfer the needed percentage to your other account.
Read also: 6 ways to start investing with little money
Emergency only
Stay away from your savings unless the emergency is something you have to take care of right away. You can solve these issues by having separate accounts for emergencies so that you do not touch your savings. Then, remember to include the presence of two accounts in your budgets, that way, the extra fees won’t inconvenience you in any way. This will keep you out of unnecessary debt
Conclusion
Debt is an enemy to wealth building. You should try as much as possible to stay off it. This means you have to live within your means and work resources to grow your income portfolio. With enough money in your savings, you can start looking into good investment options. Then grow your funds by leveraging the benefits of compounding.
