Good financial habits are a must in this day and age. With finances being stretched thinly, it is vital to know the difference between good and not-so-great financial habits to address them and change your relationship with money.
With this in mind, what are some good financial habits you need to practice?
Live Within Your Means
An obvious one but an important one too. Living within your means only spending money you have left once all of your bills are paid and not using all of your income each month. If you can’t do this, then there is no point in pointing other actions in place.
For example, if you bring home $5,000 per month, you should spend up to $4,500 and save $500.
Get Advice
If you are struggling to make heads or tails of your income and expenses, you need to get some professional advice on the best way to manage your finances. Speak to a Financial Planner who can advise you on controlling your finances and arranging products such as a retirement fund, savings account, or a 401K.
Pay Yourself First
If you’re having trouble living within your means, pay yourself first. If you have a 401k (or other employer retirement account), this is an easy way to save money. Set aside a percentage, or even a dollar amount, of your pay each pay period.
The money is transferred to savings and investment accounts and becomes real money over time. If you don’t have a 401k, now might be a good time to start one.
Pay Bills on Time
Paying bills late is another way to stretch already stretched funds. But it only gives you a false sense of wealth and then puts you under immense pressure to make up the difference. Paying your bills early gives you more control over your finances, making it easier to develop good financial habits.
Track Your Spending
Do you know where all your money goes? Chances are you don’t, and if you don’t know, then you can not make better financial decisions. Take a moment to write down all of your income and outgoings starting with your essential bills. Then track your typical spending habits and see what you spend your money on, where and then you can decide if you can trim the fat from your spending.
Keep Credit Cards At Home
If you are tempted to run up your credit cards, try leaving them at home to help you resist splurging and keep your balance to a more manageable level. If your spending is the undoing of your financial success and is wreaking havoc on your expenses, it might be an idea to withdraw cash before going shopping and leave your cards at home to help you resist the urge to spend more than you can afford.
Cut Your Expenses
This is one of the easiest things to do when it comes to getting your finances under control. Check your providers to make sure you are getting the best prices, and if you aren’t, switch as soon as possible. Use comparison sites to find the best prices for things like; home insurance, auto insurance, health insurance, utilities, streaming services, etc.
