Debt is a common problem among millennials. With the proliferation of credit cards and the prevalence of online shopping, good money spending habits are harder to learn. Whether you’re a fresh graduate or a young entrepreneur looking for financial stability in Malaysia, here are a few things you should know about being debt-free and keeping your finances stable.
1) Don’t spend more than you earn
You may think just $5 on Amazon Kindle isn’t worth much and is easy to pay back, but what you’re truly doing is getting yourself used to spending more than you actually have. Today, you might just be spending $1 or $2 or $3; tomorrow, that might be $50 or $100. Learn to manage small amounts of money; then you can handle large amounts.
2) Don’t borrow money, especially not to pay existing debt
While there are many good reasons to borrow money, there are many more that are bad. Start-ups need capital, and many young entrepreneurs borrow money to get their business started. In this case, borrowing may not seem like an unwise thing to do; indeed, many businessmen succeed even with debt. But borrowing money to fund a business is risky at best, borrowing to pay for a new car or flat screen TV is even worse. They aren’t only things you don’t need; they are also things that could land you in debt. If you can purchase something without borrowing, do so. That way, you will be able to enjoy your purchase without the thought of future payments looming over you.
Learn to recognize the difference between what you need and what you don’t. And if your current cost of living eats up your income, learn to minimize costs. Always record where your money goes. When the bills come in, and you find that your water or electricity bill is unreasonably high, find out what you can do to lower them. One less hour watching TV or surfing the net could go a long way to minimizing cost. Once you get started on really cutting down (cutting off) what you don’t need, you will find that there are a lot more things you can live without.
4) Find a secondary source of income.
A new business or a stable office job is great, but you’ll still need another source of income, especially if you are already in debt. Finding a second source of income can help you not only with achieving your dreams faster but also with getting out of debt quicker.
Lastly, you should apply what you learn. At the end of the day, no matter how many articles you read on saving money and getting out of debt, you won’t get anywhere unless you apply what you learn, so grab a notebook and a pen, or create an Excel file and start managing your finances!