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7 habits of financially responsible people

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Meet the Smiths. The Smith family makes $40,000 per year in gross salary and has $25,000 debt. Meet the Jones’s. The Jones family makes $100,000 per year and has $25,000 debt. The Smiths make less money but pay the debt off in three years. Meanwhile, the Jones family hasn’t paid off the debt despite making more money.

It may sound backward, but then you realize that the Jones have grown accustomed to a certain lifestyle, and as a result, spend the money they make on things other than paying off debt.

The Smith family, however, shows some serious maturity by paying off the debt quickly and efficiently. You may not relate to the Smiths or the Jones, but you still want to attain financial freedom and be smart with your money.

In an effort to help you do exactly that, here are seven habits of financially responsible people that you can develop.

Live within your means and stay within budget

People who are financially responsible put themselves in check. They didn’t get to where they are now by purchasing everything they wanted when they wanted it.

They live on a budget and follow one sound rule—don’t spend more than you make. As a result, instead of looming debt, they enjoy the peace of mind that comes from living within their means.

Save from every paycheck

Maintaining a budget isn’t the only rung on the sound financial practices ladder— saving money is essential. Saving a portion of your paycheck regularly adds up over time.

Start with a small percentage that you deduct from your earnings each paycheck. Keep it separate from your spending money.

Over the course of several years, you’ll see a nice chunk of change accumulating. Up the percentage you save as your annual income increases. When that rainy day comes, which it will, you’ll be glad you have some extra money to ease the burden.

Become disciplined

People who are financially responsible don’t fall victim to impulse buys or binge spending when they’ve had a bad day. This group qualifies themselves time and time again by exercising restraint and saving instead of spending.

People in this group also make wise decisions early on, like investing in their retirement and learning to distinguish wants versus needs.

Build credit strategically

Financially responsible people don’t max out credit cards or engage in frivolous spending in efforts to build credit. They understand that to build credit, they may incur some debt, but they remain disciplined, make payments and build up short-term savings to ensure they can afford what they buy.

The debt these folks have usually come in the form of student loans, mortgages or car payments. If they put things on a credit card, they pay it off monthly to avoid interest charges. These strategic thinkers avoid unnecessary monthly payments and prefer to buy things outright when they can, or at a minimum, put forth large down payments before securing a loan.

Find ways to give back

Sure, there are some Scrooges out there that you could deem as financially prudent, but the truth is, many people who show serious financial intelligence are the same folks giving to charity, serving the community and helping the less fortunate. They find ways to give back, and not just for tax purposes.

Set goals and work toward them

Goals aren’t just dreams for those who are smart with their money. Goals are filled with actionable items that make up an overall strategy to attain that special something. Write them down and review them often.

Don’t expect to build a kingdom overnight

The greatest empires the world has ever seen weren’t built in a day, nor will you see your personal empire raise that quickly. Seek to remain happy in your circumstances and little by little, as time goes by, you’ll look back and realize that you’ve been building a lovely kingdom stone by stone.

When it comes to developing these qualities, it’s not too late. As you save and manage your money, let seasoned professionals help you along the way.