People in financial need can approach a licensed money lender if they need a quick cash boost. Most don’t want to be indebted to money lenders, but sometimes it is necessary. Thankfully, they are both legal and safe.

At the same time, it would be best if you can avoid taking out loans. The good news is with good habits, you may not need to get into debt. Here are five tips for good money management that will keep you away from debt.

1. Stick to a budget

A budget is the cornerstone of financial literacy. It lets you take control of where your money is going, down to the last cent.

Track your income and expenses in as much detail as you can. If you find this tedious, you can download budgeting apps on your mobile device. They make it easier to record the money that goes in and out.

It also helps to set limits for less important categories of expenses, like leisure. For example, you can cap your leisure budget at $100 per month. Once you have spent that much for fun, do not spend any more for leisure.

With a budget in place, you can easily avoid overspending, as you know exactly how much money you have spent so far.

2. Pay off debts as quickly as you can

Debt can kill your financial health quickly. That’s why it’s absolutely essential to pay them off as soon as possible. With debts out of the way, you can then build savings and investments.

As for credit card bills, they should be paid in full every month. Avoid paying only the minimum; you will incur a lot of interest that way.

If you have debts to pay with friends and family, it helps to agree on payment terms. Create a payment plan with each person you need to pay back.

If your budget lets you pay them in full right away, do it. If not, talk to them and agree on a monthly repayment plan. This way, you can eventually pay off your debts without destroying your good relationships.

3. Build an emergency fund

Once you have paid your debts, the next thing you must work on is your emergency fund. This is money you can readily use in case of accidents, sickness, job loss, or other situations that require immediate cash.

Most financial advisors recommend saving an equivalent of three to six months of your regular income as your emergency fund. That way, you and your family can still live decently even if you lose your job or cannot work for a long time because of an illness or injury.

4. Live below your means

Here is a rule of thumb in financial literacy: your expenses must never exceed your income. This way, you can save money each time you receive your paycheque.

Take note of how much money you earn each month, then compare it against your monthly expenses. If the expenses are greater than your income, cut any unnecessary spending out of your budget.

For example, if you have a Netflix subscription worth $7 a month, but you don’t watch it often, cancel the subscription. It’s better to spend that $7 on food, rent, or utility bills.

Do this until your expenses become lower than your income. The difference can then go to your emergency fund and savings.

5. Invest for the long term

Investing is key to building wealth. Be wary of ‘get rich quick’ schemes, though, as they are always too good to be true. Anything that promises huge returns on your investment after just a short time is definitely a scam.

Instead, put your money in legitimate long-term investments like the CPF, stocks and Real Estate Investment Trusts (REITs). It will take years to get substantial returns on your money, but these investments are worth it in the long run. They are among the best ways to build wealth.

Another good investment is starting a business. If you have your own business, you can multiply your income and even earn while you are not working. But starting a business requires capital first. So if you need extra funds, a licensed money lender is a great source. It’s even easier to get a business loan through lenders than banks.

Conclusion

Avoiding debt is the first stage of financial literacy. By following these five simple tips, you can get out of debt quickly. It may not be fun if you restrict your finances, but it will be better for you in the long run. Your future self will be grateful because you will have fewer financial problems down the road.

Make sure to keep these financially healthy habits so you can avoid debt entirely. The smaller debts you have, the better. In fact, if you can bring them down to zero, that will be the best for your financial well-being.