Financial woes have been known to plaque people all over the world and at various times in their lives. While sometimes, these are situations out of their control, there are many times when it comes down to proper management of their finances on a day-to-day basis that can mean the difference.
If you have been struggling with your finances and wondering where you may have gone wrong, the good news is, there are some really rather simple fixes that can help you to master and alter the future of your own finances.
Here are 5 financial habits that can change your life.
1) Automating Your Finances
When it comes to managing your finances, there are likely to be times when you feel overwhelmed. While this feeling is of course normal, it can however, mean that some of your financial responsibilities may fall through the cracks. One such example, has to do with your monthly payments.
You are also likely to have multiple payments that need to be made each month, and on specific days of the month too. Your credit card bill, for example, might be due by the 3rd or the 4th of every month, and your mortgage payments may be the 1st of the month, and so on.
In fact, you may have even more payments than this each month, and this could mean that missing a payment is a possibility. The reality is that, by missing or making late payments, your credit can dramatically decline, and this can lead to a whole whack of other financial complications.
Fortunately, there are methods of improving your payment consistency, starting with setting up automatic payments. Not only can you set up your credit card payment, your mortgage, your car loan, etc., you can also automate your overall approach to your finances, including transferring money to your savings account as well as any other investments you may have.
In the end, not only will automating your finances help you keep up your payments, it will allow you to save your money at the same time.
2) Remembering to Invest Your ‘Spare Change’
As briefly touched upon in the previous point, investing is also a very important part of your overall financial perspective. Sometimes, however, investing seems like the last thing we can afford do, as our current priorities may include, focusing on trying to pay off debt and saving a little bit extra for a rainy day.
With that being said, investing money does not need to be done on a dramatic scale each month. Instead, you can start investing a small amount each month and watch it grow over time. For example, if you can realistically afford to invest $25 each month, over time, small amount will continue to increase, ultimately turning into a decent amount of money for you.
Depending on how and where it is invested, and the rates, a diversified investment of $25 has the potential to climb rather significantly each year. This monthly investment can also be set up to be automatically transferred from your account directly into your investment, without having to lift a finger. By implementing this new financial change, this can definitely be a great way to management your finances with more ease and efficiency.
3) Cutting Back on Your Daily Spending
One other small financial habit that has the potential to change your life, is to cut down of your spending. While you may be in a routine of making certain purchases on a weekly or even daily basis, these purchases could really be eating into your finances.
For example, if you are spending money on coffee and eating out each week, this could prove to be quite expensive for you. Instead, look at where you may be able to save some money. Can you cut down on purchasing coffee each morning and brew your own at home? Can you prepare meals at home instead of buying breakfast and lunch each day at a restaurant?
If you add up the amount you spend each week on these expenses, it could amount to $30-40/day, $100 -200 /week, and a grand total of approximately $800 each month. Now, if you can save this amount each month, then think about how this could significantly improve your finances in a variety of ways. You could save this money in an emergency fund, you could use this money to pay down your debt, you could invest some or all of this money and increase your nest egg for the future.
Ultimately, reducing your daily and weekly spending has the potential to give your finances the boost it needs.
4) Saving Any Unexpected Cash You Receive
You receive money for you birthday, you get a bonus at work . . . what do you do with it? Well, many people perhaps will see this as an opportunity to go on a spending spree, this isn’t always the best way to turn around your finances . . . so maybe another course of action would be better.
An alternative approach to spending this money the second you get it, is to view it as if it is just normal income and not bonus cash you weren’t expecting. The translation here . . . instead of spending, save!
By treating this money as ‘regular’ money, as opposed to creating more debt or spending beyond your means, you can plan to save it or use it to get ahead of your payments, in turn improving your financial position moving forward.
5) Setting a Budget
While, all of the above mentioned tips can help you achieve financial stability, one of the most important financial habits you can adopt is to create and stick to a budget. Budgeting is a tool you can use to track your spending as well as monitor how much money you have coming in and how much you have going out. It can help you ensure you don’t overspend and can keep up with all of your payments.
Ultimately, budgeting can prevent you from going into debt, as well as enable you to get out of debt, if that is reflective of your current financial situation. As you can see, effective budgeting has the ability to really change your life and to keep you on a sound and successful financial track.
In the end, if you want to improve your finances and alter the course of your financial future for the better, there are many habits that you can choose to embrace. Many of these changes don’t need to be complicated, yet only require a simple adjustment on your part. If you want to change your life, start with changing your current financial actions and observe the difference that they can make.