04 May 2018 | Written by Louis Tully
Having a good handle on your financial management skills may come easy for some of us, but for the majority of Americans, it’s a skill that is challenging to learn and takes plenty of patience and practice to master. Not everyone is very good at keeping their money in their wallet, especially when faced with tempting advertisements, flashy signs and eye-popping sale displays. But if your financial situation’s left you reaching for installment loans to stay afloat, you may want to try exercising these 4 financial habits to be the master of your money:
Having a budget in place is the cornerstone to good financial management. If you don’t have a budget set up, what better time than now to create one? Get a grand total for your fixed monthly expenses, including housing, electric, car insurance, etc. and compare this total against your net income. Keep in mind that there are other bills you’ll need to take into account, such as groceries, gas and even entertainment. Once all expenses are accounted for, whatever money you have left is where you have wiggle room to make things happen. Once your budget is in place, do your very best to stick to it. It’s an adjustment you may find challenging at first, but in time, you’ll get used to your new way of doing things.
A good financial practice is to make sure you’re always saving, also known as paying yourself first. With every paycheck, be sure to allocate a set percentage directly to your savings. The recommended amount you should be stashing away in savings is 10% of your total income. Though saving small amounts of money might seem pointless at the time, the end result could surprise you. For example, if you committed to saving just $25 a month, you would have $300 saved in a year and $3,000 saved in 10 years. If you committed to saving $100 per month, you would end up with $1,200 in a year and $12,000 in 10 years. A decade may seem like a long time, but it goes by quicker than you think, and with the added impact of compound interest, the amount you end up with could be substantial.
Whenever you find an opportunity to make additional income, go for it. Whether it’s freelance work, picking up a part-time job or even selling some of your unwanted or unused household items online, making extra money and adding it to your savings is a great way to give your finances a boost. This holds true for other forms of income, including tax returns, inheritances or any other type of windfall money.
Above all, an often overlooked aspect of developing good financial habits is to simply be thankful for what you already have. Most people fail to stay within their budget because they fall into the trap of forever chasing the next new thing, regardless of whether they need it or not. If you can learn to be grateful for what you already have, you won’t find the need to spend away your future endlessly accumulating more and more useless stuff.
By putting these four simple tips into practice, you could quickly develop new healthy habits that could greatly increase your wealth over time. Once you get through the initial adjustment phase, you will probably find that it’s a lot easier than you thought it would be. Start with mastering your budget and build your momentum from there. There are tons of other things you can do to improve your financial status as well, so get creative and find your path to financial security and prosperity. Good luck and happy saving!