Being good with money is not an overnight transformation. It is the day-to-day habits that separates the financially free from the rest.
Want to know what the financially free all have in common? They set goals and stick to the budget they set themselves as best they can. They are prepared for life getting in the way. They make plans for their dreams. They invest in their future and themselves. They track and take responsibility.
They don’t think “I wish I had what they have” or “It’s just not fair, I can’t afford what I want!”
Read through the below and adapt these healthy money habits to your life today:
KNOW WHAT YOU HAVE & TRACK YOUR SPENDING
The simple process of writing down and analysing exactly what you are spending your money on regularly will make you think twice about unnecessary expenditure. This can be transformative. It makes it easier to identify areas where you can cut back on expenses and save more money. According to a survey by MINT Life 65% of people have no idea how much they spent in the last month, this is a scary place to be.
SPEND LESS THAN YOU EARN
It sounds obvious but so many of us can fall into debt by borrowing from the future to pay for something today. It will always catch up with you so make sure you are prepared and capable of paying it back. The interest rate on a personal loan can vary widely. For example, a 2% interest rate may sound attractive but the ‘APR’ is the true cost of what you are being charged. Beware of this and always calculate the cost before you borrow.
MAKE SAVINGS NON-NEGOTIABLE
No matter what your situation is currently, make savings non-negotiable and get into the habit, even if it’s just a few €/£ a week, every bit adds up.
TIP: set up direct debits to your savings account for the day you get paid. Auto-saving is much easier.
ALLOCATE EVERY CENT IN YOUR BUDGET
Budgeting can seem restrictive sometimes which isn’t so fun. Every month, sit down and allocate a purpose for each €/£. If changes need to be made throughout the month, make them.This gives control and clarity without restrictions. Reflect regularly on how you are doing and how much you have left.
CUT BACK ON SMALL HABITS FOR THE ‘BIG THINGS’
Analyse how much your ‘guilty pleasures’ are costing you. We are all for pleasure and splurges, but it is important to know their long-term cost. For example, eating €/£12 lunch each weekday is €/£3,120 /year and after 25 years this is €/£78,000. If it’s worth it, brilliant! If it’s not, make a change.
WHEN YOU HAVE IT....INVEST IT
If you have money that you don’t plan on spending right away it’s best not to leave it sitting pretty in an account gathering dust. Every year it may lose value so ensure it’s keeping up with inflation by investing it wisely.
Invest for the long term: Invest your money in stocks, bonds, or mutual funds to grow your wealth over time. However, be sure to do your research and seek professional advice before investing.
DEBTS COME FIRST
Again, this might sound obvious but when in debt, plan to get out sooner rather than later. It’s akin to when you open that packet of biscuits and you keep reaching for more when you are already full.
EDUCATE YOURSELF ON PENSIONS
Pensions are a way of saving for the future with a very important tax break. It gives you security for your retirement. Your future will be bright and something to look forward to. It’s in your hands, you can thank yourself later.
LOOK AT THE BIG PICTURE
Do you have a dream to live by the sea in a beach house? Plan now for the bigger picture. Small spending hits might make you feel good in the moment but your long-term goals will be miles more satisfying.
DON’T RELY ON CREDIT
If you have gotten into the habit of counting your credit card and/or overdraft as available funds each month don’t be too hard on yourself. So many of us have relied on credit at some point. Make the conscious decision to mindfully move away from credit as a fall back and set a date to clear your debt.
Remember, being good with money is a lifelong process that requires discipline, patience, and determination. By following these tips, you can develop healthy financial habits that will help you achieve your financial goals and live a financially secure life.
Do you find your finances are getting you down? Do you feel out of control? The Head Plan Finance is designed to reduce worry and strain that can so easily come with money management. It is designed to give you perspective, clarity and a sense of calm around money. It is more than just budget tracking, written by a Life & Wellness Coach it incorporates mindset and wellness for long lasting shifts in your money story.