When thinking about personal finance, many investors often think in terms of time periods or deadlines. Instead of focusing only on tax selling deadlines, charitable contribution or RRSP limits, and other deadlines which tend to accumulate at the beginning of the year, creating habits that will be conducive to building wealth and financial freedom throughout the year are very important.
In this article, I'm going to discuss three steps every investor should take throughout the year to do just that.
1. Budget accordingly
Creating a budget on January 1st and putting it in a drawer where it is never reviewed or updated throughout the year seems kind of pointless. Revisiting one's budget on a more frequent basis (quarterly or monthly) is a very useful exercise in ensuring compliance with the goals stated earlier in the year.
2. Spend accordingly
Having the greatest plan ever means nothing without execution. Breaking annual, quarterly, or monthly goals down into daily spending amounts or buckets is a great way of making sure the important budget you set at the beginning of the year is attainable. Before bandaging up the wound, make sure to stop the bleeding.
3. Pay yourself first
The concept of setting aside a predetermined amount of money every month, no matter what, has been proven to be a very powerful way to build wealth over time. By investing a small portion of what one makes, and delaying other payments if necessary to do so, guarantees a bucket of savings continues to grow, no matter what.
Invest wisely, my friends.
