How to Manage Healthy Financial Life

In this post, I will share 5 Financial Plan Tips to help you build wealth with low income from anywhere in the world

Money Management
How to Manage Healthy Financial Life

Why is a healthy financial life especially important?

Studies indicate that having structured financial goals can help you have a bigger picture, and it helps you to set a clear map for your short term and long term income goals.

Big disclaimer, the content of this post is not to provide legal financial advice.  It is simply to share the knowledge and the experience as well as to inspire and motivate you so you can achieve your money goals.

The following 5 tips can help you to have structured and effective financial goals.

I will give you bonus tips at the end of this post. So, stick around and enjoy reading to the end.

There are different recommendations when it comes to target spending and saving rules of thumb.

The most common rules of thumb are 50/30/20% and 50/30/15/5%

There is no right or wrong rule of thumb, it is just a matter of individual preferences based on your target spending and saving plans.

For the sake of this post, I would like to share the

50%   30%  15%  and 5% target spending, saving and investing rule of thumb. To explain a little a bit more: –

  1.  The 50% rule of thumb- Create a spending plan – Do not spend more than 50% of your take-home income for your essential expenses: such as living expenses, for your home, your food, insurance, bills…etc
  2.  The 30% rule of thumb- Identify your highest interest rates on your credit cards and you should Pay off credits with high interest rates first with your 30% take-home income. Experts recommend that paying off the high interest rate credit cards first is a very smart way to spare your money and to start the “pay yourself” strategy.
  3. After you pay off your high interest rate credit cards, plan to Invest the 30% of your take- home money with strong commitment and determination. When you start investing, the recommended best investment strategy is to have an average annual rate of return of 6.5% on your investment. This might be unrealistic at the beginning. You can do more research and do more self-education to understand an average Return on investment percentage that fits with your situation.
  4. The 15% rule of thumb- Create a long-term saving goal – Save upto 15% of your annual income. Instead of planning to save once a year, plan to save it every month. Your savings are not after your expenses, you should save before you take money for your essential expenses. To be more precise, plan to save exactly 15% which is the average percentage for your savings as recommended by financial experts. Always save 15 % of your annual income first if you really are determined to become financially strong. It is for your long term retirement plan.
  5. The 5% rule of thumb – Have an Emergency fund or short term saving- Save 5% of your take-home income towards your emergency fund. Emergency fund is the money you use in times of illness or job loss. It is extremely important to be prepared financially rather than face the hardships when they arise.  Financial experts recommend to have an emergency fund saved to cover your needs for upto 3-6 months if you lose all your income for some reason.
Healthy Financial
How to Manage Healthy Financial Life

Bonus tips: –

The biggest takeaway from this post is, have the concept of “Pay yourself first” when investing and saving.

In other words, do not keeping losing money, do not keep paying off interest rates for your loans and credit cards, do not immerse in big dept unnecessarily when you can pay it off and start saving money for yourself and start investing for your future.

In general, it is not about micromanaging every penny or every dollar.

It is about “Know why you should invest?”, ask yourself what ultimate goals you have that make you stick with your investment plans. In times of emergency and unexpected financial loss, know how you can create more cash flow to your bank account no matter how hard it can be.

Always, remember to have the attitude of “how can I afford to invest?” Rather than “I can’t afford to invest”

Discipline yourself to stick with your goals in order to become wealthy and prosperous.

For more understanding, read the following three recommended books:

  1. The Richest Man in Babylon by George S. Clason
  2. Rich Dad Poor Dad by Robert Kiyosaki
  3. Think And Grow Rich By Napoleon Hill 

Let me know if you have any questions in the comment section.

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Thanks for stopping by this post.


Healthy Financial Life
How to Manage Healthy Financial Life