When you are in debt, one thing’s for sure, you haven’t been responsible in handling your finances. If you really want to get out of your debt situation, you want to make sure that you learn how to become a better manager of your finances.
Financial responsibility covers a broad topic that you should try to learn and implement even as you work on paying off what you owe. It does not take a rocket scientist to be financially responsible. You just have to be very patient, disciplined and accepting of the changes that has to happen in your life. Your debt signifies that you have been committing mistakes in your decisions – especially when it comes to your money. You have to change these so you can achieve a debt free life.
What is financial responsibility
To be able to say that you are financially responsible means you live within your means. That is the simplest and most straightforward answer that you can get out of its definition. To do that, you need to learn how to spend a lot less than what you make.
In truth, that is what financial experts say will make you successful. Self-made millionaires do that. They live below their means and any extra that is not spent is either saved or invested. That is how your personal wealth can grow and that is the secret to achieve financial stability. Regardless of how much you earn, you must be able to live within your means. The lower it is, the higher the challenge. But if you this perception is deep rooted in you, the implementation of the changes will not be difficult to apply.
To begin being responsible with your money decisions, you need to know where you stand first. That requires a budget. This is one of the tools that will help you live within your means. It is important to separate frugality with being responsible with your money. They can go hand in hand but you can be financially responsible even when you buy extravagant things like a yacht or plan an annual vacation. As long as it is within your means and does not take from your savings and your investments, you are making the right decisions.
Habits that will make you financially responsible
There are a couple of habits that you should specifically implement if you want to exhibit financial responsibility. Here are a couple of them.
Knowing what is a necessity and a luxury. This will help you decide on what you purchases make sense and what should be skipped on. It also allows you to make smart spending choices even on your necessities. For instance, you need to eat but you don’t necessarily have to eat in a restaurant. That is how you display financial responsibility.
Saying no even when you can afford it. You get to be responsible and smart with your choices if you can say no to purchases even if you know you can afford it. For instance, if you are buying a home and the lender tells you that you are qualified to loan a million dollars, will you look for a home that costs as much? Financial responsibility will tell you no. If you are only 4 in the family, you need a 3 bedroom unit – that’s it. That will only cost you $300,000 to $500,000.
You invest in your future self. Another habit that you need is valuing your future self. Investing in your retirement and your savings will help ensure that your future will involve the best lifestyle that you can afford. Grow your savings and your emergency fund. It can also keep you from being put in a position that requires you to borrow money.
Knowing when and how to invest. Investing can be quite scary and the risk is something that you should not take lightly. But do not take this fear and let it keep you from growing your wealth. Know what is involved and take the plunge. You don’t have to invest everything that you own – just enough amount that you can risk losing. There are site like Investor.gov that provides useful insight to American investors. Use this resource to your heart’s content. It’s for free!
Using a budget and constantly changing it. As mentioned, a budget is one of the most important tools you will ever use. Make sure that you create one, follow it strictly and change it from time to time as your income and expenses adjust.
Not paying heed to your neighbors. A financially responsible is when you do not care if your neighbors own things that you also want but you know is a waste of money. Just concentrate on what you believe your family will need and prioritize those expenses.
Paying down every debt that you owe (and not adding to it!). Debt has no room in a financially responsible person’s life. Any mistake that led you in debt will have to be corrected and erased along with your debt.
Since being financially responsible means you have no room in your life for debt, that will guarantee debt freedom even more. It will help you focus on your debt payments, keep you from incurring more debt and will help you develop the habits that you need to stay out of debt.
More importantly, financial responsibility means you make a conscious effort to learn more and explore better financial education portals. There are many resources online apart from Debt Consolidation USA and you are free to explore them all. We have a previous post that provides the top 6 financial websites that you can use. Even the government provided a website known as MyMoney.gov that will provide you with helpful financial education articles.