6 financial habits that will make you rich - How to grow your money (2024)

ET Online|

May 14, 2024, 04:08:41 PM IST

1/7

How to grow your money

Who does not want to be a millionaire? But the truth is becoming rich does not happen overnight. You have to consistently make the right financial decisions to grow your wealth. Here are the five habits that you can follow to become rich.

Getty Images

2/7

Set a goal

It is relatively easy to save money if you have a goal to achieve. And by what time you want to achieve that goal. It is even better if you have a reason to achieve that set goal. It will keep you motivated throughout your financial journey. Planning will give you a perspective on how much money you need and how you can get it. It does not always need to be extravagant such as planning for a Europe trip. But a simple "want to save Rs 1 lakh in a year" will work perfectly to save money.

So the first step is to write down your goals in simple and easy language with a timeline.

Getty Images

Budgeting a must: Keep track of your spending

The only way to save money or avoid a debt or a huge credit card bill is to track your expenses. You can set a monthly budget for yourself — rent if you pay one, monthly bills you need to pay, needs, wants, and savings. Needs are those expenses that are necessary such as transport or food and wants are your discretionary spending.

There are many free budget planner applications available for both Android and iOS. You can simply download one and start using it. Try to stick to your budget unless it is an emergency or absolutely necessary.

Getty Images

4/7

Start investing your money

Saving money is not enough. You need to invest money to grow your wealth. Choose a financial product based on the risk you are willing to take and invest. Regular monthly investment can grow your money exponentially in the long run, thanks to compounding.

Sooner you start investing, the longer your money will stay invested and the more return you will get.

Getty Images

5/7

Choose the right financial product

It's important to choose the right investment option to grow your money. If you are young and can take some amount of risk, you can start investing in equities. You can also invest in debt instruments such as fixed deposits, bonds, and various small savings schemes. The return from debt investments may be lower when compared to equities but the risk is also relatively less. A Systematic Investment Plan (SIP) in mutual funds could also be a good investment option.

If you have already invested, check your investment portfolio periodically to see if you need to make any changes to it.

Getty Images

6/7

Ask yourself: "Do I really need it?"

Making a budget is the first step but you need to stick to it to not overspend. A little willpower and awareness can help you to achieve this goal. If you go out to eat dinner at a fancy restaurant every weekend and pay through your credit card, you may need to think twice before taking the next trip. How difficult will it be to cut two such restaurant visits in a month? Start slowly and stick to it.

Before making an impulsive purchase, ask yourself: "Do I really need it right now?" Go for it only if it is a hell yes! Otherwise, let it remain on your wish list.

Getty Images

7/7

Emergency fund is a must

An emergency fund is a contingency fund that not only helps financially during the most difficult times but also prevents the derailment of your savings for long-term goals. Financial planners usually suggest keeping aside six months' worth of expenses in your emergency fund. However, as with anything personal finance, this thumb rule can vary according to your circ*mstances.

Getty Images

Read more on

how to be rich

how to grow your money

how to save

how to double your investment

how to be a millionaire

how to become a millionaire in 2024