Seven money habits for a wealthy future

According to a research on the economic security of American's middle-class families, 76% percent of the families do not have enough net assets to meet 3/4 of basic expenses for 3 months. Although the data was as of 2006, the report revealed a trend of the situation getting worse over the years.

These days, the newspaper is flooded with news on economic downturn, job loss, bankruptcy... Are you ready for the future? Rate yourself with the household financial security scorecard. Here are some money habits to get you off the shaky ground.

1. Start saving automatically.
Start from 10% of your after-tax income. Setup an investment account with some of the low-cost and low-risk index funds. Schedule a monthly or bi-monthly deduction from your checking account to feed it. You'll be surprised how much you can save in a year.

2. Set a realistic budget and stick to it.
Find out how much you've been spending every month. Set a budget that's both feasible and comfortable, but a little lower than your average spending. If you spend more than necessary, deduct the excess from the budget of the next month. If you end up saving some, keep it aside as a rewards to pamper yourself. And enjoy it without guilt.

3. Always go shopping with a list (and your reusable shopping bag).
If an item is on your list, look for a bargain first. But don’t buy anything ONLY because it’s cheap. It's not your responsibility to cram your personal space with useless stuff in order to help the manufactures clear their inventory. Ask yourself if you'll buy it if it's not on sale. If the answer is no, walk away.

4. Examine your cash flow monthly.
Pay off your credit card balance every month. Figure out your bank fees and eliminate them by choosing a different plan or different bank. Look at the charges on cable, cell phone, internet, membership, are you paying more than you should?

5. Detail your net worth on paper and keep updating it every quarter.
Calculate your assets and liabilities. Follow up on your investments and make adjustments if necessary. Have a plan to increase your asset, not your possessions. There are plenty of books teaching you how to do that, which is why you should...

6. Educate yourself about finance every week.
I borrow books from the library to make sure I read them. You can also talk to a financial adviser, but don't buy anything yet. Talk to your friends and do you own research. Make sure you understand what you are getting into. At the end of the day. The broker gets his cut regardless if your investment is paying off.

7. Work on generating more income everyday
Once you are in control of your finance, it's time to start making more money. It's the best way to improve your financial situation. If you are an employee, a side business can provide you more income and numerous tax deduction benefits. If you are not, find out better ways to turn what you are doing into a self-running business.

Money comes to those who know how to take care of them. Take care of your money and it will take care of you.

photo by Ben Goldstein

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