Good financial habits help you spend wisely, save well and reach your financial goals faster.
Once you've begun a habit, it will eventually become second nature, and before you know it, you'll have made real progress toward your dreams.
Try one of the 5 tips below and set yourself up for financial success.
Tip 1: Track your spending
The very first thing you need to do is understand how much total income you have and how much you spend each month.
Keep a record of all types of income you receive and all your expenses for a full month.
Make sure you track all spending in your household.
Once you see all of your spending in one place, it will be easier to see where you may be able to save money.
Quiz
Which of these is an expense?
Tip 2: Start Small
Tackle the smallest problems or goals first.
If you have debt pay off the smallest amount first, then the next smallest amount and so on.
Set a small goal for yourself- like saving for a small item you need. Put aside a small amount of money each week until you have met your target.
The idea is, when you’ve paid off a debt or achieved a goal, you feel motivated and powerful, which gives you the momentum to keep going.
Tip 3: Pay yourself first
Make sure you focus on your financial goals (and yourself) first
Always take out a part of your regular income and put it aside before you spend money on other things.
If you can, automate it with your bank and set a recurring transfer to your savings account every payday.
Even if it’s a small amount from your regular income, you will be pleasantly surprised at your savings over time.
Tip 4: Aim for a 10 percent savings rate
If you’re not sure how much you should be saving every month, aim for 10 percent.
Try to save 10% but don't feel bad if you can't make it every month- any amount of savings is better than no savings.
If you find that you want to save even more, you can always increase the amount later.
If you regularly save 10 percent of your income, no matter how much you earn, you will always have the confidence of knowing you are living within your means
Tip 5: Try a no-spend day or weekend
Commit to a 1 or 2 day period of spending ONLY on necessities. Here are some ideas:
Walk or bike everywhere instead of driving or taking public transit
Bring your lunch to work every day
Embrace free entertainment options, like exploring local parks
And if you end up spending money, don’t get discouraged. The overall idea is to simply spend less and save some extra cash.
Photo by Mike Benna on Unsplash
Take Action
There are lots of different ways to help you reach your money goals- it can be overwhelming at times.
Try one of the suggestion above and once you have developed a routine, try another. As habit number 2 says, start small.
Your feedback matters to us.
This Byte helped me better understand the topic.