Being a fiscally responsible person is an important part of improving your finances and your overall relationship with money.
Sure you can make a lot of money, but can you keep it? If you are not fiscally responsible you might find yourself encountering this problem.
Becoming fiscally responsible means being smart with your money and finances. Someone can become fiscally responsible by saving and investing more while at the same time spending less and paying off any debt.
Being fiscally responsible is a huge part of achieving financial freedom. In this article, I’m going to go over exactly what it takes to become fiscally responsible in 2021.
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What is Being Fiscally Responsible?
Fiscal responsibility involves making smart decisions when it comes to spending money. Many use the term “fiscally responsible” when talking about government spending. However, this is not always the case. Fiscal responsibility can also be a term used when talking about personal finance.
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Why is it Important to be Fiscally Responsible?
Being fiscally responsible is important and often necessary for those wanting to get their finances in order. Fiscal responsibility helps people become financially independent and make smart choices with their money.
People that are not fiscally responsible might struggle financially and lead a more stressful life.
Money is a tool that can be used to give you control over your life and live it on your own terms. Making money is one thing, spending that money wisely is something completely different
How Do You Become Fiscally Responsible?
So how do you become fiscally responsible?
Well, there are a few things that fiscally responsible people do that you could do as well.
Budgeting your money is a huge part in becoming fiscally responsible. Figure out how much you spend each month, and how much you need to save.
Next, you will want to pay off any debt that you currently have and start to invest.
Budgeting, saving, and investing are all great things to do to become fiscally responsible. However, there is one more part to becoming a fiscally responsible person.
Starting a side hustle. A 9 to 5 is no longer the safest way to make money. Having multiple streams of income helps lower the risk of financial hardship if one income source goes away.
7 Simple Tips to Becoming Fiscally Responsible
Below are 7 simple tips to becoming more fiscally responsible. This list is mostly in order. However, feel free to skip around and follow it based on how you are currently from a financial standpoint.
The first, and probably most important tip is to create a budget. If you are new to budgeting, I recommend following the 50/30/20 rule.
The 50/30/20 rule involves spending 50% of your budget on your needs, 30% on your wants, and 20% on savings or debt.
Every dollar that you make each month should have a purpose.
What does that mean? It means every dollar that you make should be allocated to monthly expenses, savings, investments, or paying off debt.
Its so easy to loose track of the money you make. If you find that this is a problem that happens often to you, budget for it!
Set aside a certain amount of money that you know you will most likely loose track of.
A budget helps you take control of your finances and more times than not, makes thinking about your money a lot easier.
With a budget you do not have to worry about how much you spend. Make a budget and stick to it!
Next is saving. Saving money is important for a couple of reasons. The first being that we all want to live a little right?
Setting money aside for a future trip, a down payment for a house, a car, or college are just a few reasons to save money.
Whatever the reason is, saving money is a step in the right direction when it comes to becoming more fiscally responsible.
3. Create an Emergency Fund
Creating an emergency fund is similar to what was previously talked about with saving. However, an emergency fund is made with the purpose of covering any unexpected expenses when they occur.
For example, if you lose your job an emergency fund will help cover any expenses so you do not have to take on any unnecessary debt. Having three to six months’ worth of expenses is typically recommended.
An emergency fund gives you something to fall back on if hard times come about. If anything, it creates some financial peace of mind.
4. Track Any Spending
Tracking your spending plays a big role in whether or not your budget will be successful. Once you set aside money and decide how much you will spend, save, or invest, it’s important to follow your budget.
By tracking your spending you can see where, or if you overspend adjustments can be made to your budget in the future.
Find out areas where you spend more, and areas where you spend less. Over time this step will become second nature as you create the perfect personalized budget.
5. Pay Off Any Debt
Paying off debt is an important part of becoming fiscally responsible. You do not want other people to have a claim to any money that you have rightfully earned.
Debt often hinders one’s ability to obtain wealth due to the fact that you’re too busy paying other people instead of yourself.
6. Start A Side Hustle
Its become more and more obvious that relying on just one source of income is no longer the move.
Typically people’s main source of income is their 9 to 5 job. This is an excellent way to earn money, but there is always risk involved. For example, one day you might be working and doing your job, just to hear that your boss is laying off many of their workers.
What would you do if that were to happen to you?
This is why starting a side hustle is the number one recommendation when it comes to lowering that risk.
A side hustle provides an alternative source of income that you can consistently rely on, even if your main source of income goes way.
I made a guide to the 19 best side hustles in 2021 that you need to start. Most side hustles are pretty easy to start. In no time you could be earning extra income every single month!
The last tip to becoming more fiscally responsible is investing your money. There are many ways to invest your money. Stocks, bonds, real estate, your companies retirement plan, etc.
There are many ways to invest, all with varying levels of risk. One of the best ways to start is by talking with a professional on the subject.
Learning how to become fiscally responsible is something that takes time. This being said, if you follow the tips listed above, you will be on your way to becoming more fiscally responsible and overall better with your finances.
Making money is one thing. Learning how to save, spend, and invest your money is a whole different topic.
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