I don’t know a single person who doesn’t strive to be successful and enjoy a happy and stable life. We might not always have full control over career or personal choices but we can certainly guarantee finance stability if applied correctly. By having successful financial habits, it can steer us on to the right course for a comfortable, debt free lifestyle.
Unfortunately and more often than not, too many people don’t quite understand everything that goes into developing great financial habits. So let’s have a look at successful financial habits that could make a difference to your life, starting today!
It’s very easy for anyone who makes a decent living to go a little overboard with purchasing some items that simply aren’t needed. You should always practice self control so that bills don’t start to add up.
Next time you want to purchase an item, first ask yourself, do I really need these. If your answer is no then don’t buy. You should also put a halt to putting purchases on credit cards and wait until you’ve actually saved up money. The sooner you learn how to delay gratification, the sooner you can get your finances in order and use money that could be put into savings or towards a retirement fund. If you like using credit cards because of the rewards benefits or the convenience factor, make sure you pay your balance in full each time a new bill arrives.
KNOW WHERE YOUR MONEY GOES
It’s very easy to lose track of money every month especially when cash just flows in and out of your bank account via direct debts or a quick swipe of your card each day. Getting into debt is a common situation for most adults who don’t pay enough attention to their spending habits. Everyone knows about the bills they pay, but reoccurring fees due to subscriptions, going out to eat too many times and other factors can give an unhappy surprise at the end of the month.
To make sure your expenses isn’t exceeding your income is to budget. Once you notice how your morning coffee adds up over the course of a week or month, you’ll realize that making small, manageable changes in your daily expenses can have a positive impact on managing your spending.
SET REALISTIC FINANCIAL GOALS
Set financial goals so that there is something to work towards every single month. It doesn’t have to be anything big but it should be attainable and will help you to stay on track.
For example, if you are paying for a gym membership you never used for the last six months. Cancel it now! If you regularly eat out, try eating in more at home and save some money.
SET UP A SAVINGS ACCOUNT
No one is immune to the possibility of having something unexpected happen. It’s recommended that we all have enough savings that can cover six months worth of bills including mortgage payments should you lose your job.
Ideally, it would be great to never use this savings. It is something that’s meant to give you peace of mind so that you are well prepared for the unexpected.
By saving £50 each month will add up over time even though the short term prospects look rubbish. Just think, £50 saved over 5 years amounts to £3000. If you can afford to save £100 each month, that’s £1200 over a year. Most bank accounts have linked regular saving accounts with high interest rates over a twelve month period. It’s definitely worth setting up.
CREATE A BUDGET & STICK TO IT
Every person should have a budget, but instead of looking at budgets every week, create a budgeting system that accounts for every known expense. This is usually a more realistic way of taking a look at everything.
Write down what you bring in and what you spend each month. Be honest here because if you aren’t, the budget won’t work. Write everything down from the essentials to the stuff you don’t need. Once you do this, you’ll find it is much easier to an overall view of where your money is going.
Take the time to set up at least a fairly simple budget to keep everything in order. This just ensures that there is not going to be any issues at the end of the month.
INVEST IN YOURSELF
Being a financial success isn’t all about saving and being thrifty. Every single person should be investing in themselves throughout their life regardless. Self care is worth putting money towards whether that’s going to a luxury spa or eating at a fancy restaurant instead of cooking at home. As long as you don’t throw the budget completely off, these investments are necessary for your emotional and mental well being. It’s perfectly fine to reward yourself every once in a while after meeting financial goals.
HAVE A RETIREMENT PLAN
Retirement might be decades off, but it is never too early to start looking at putting money towards the future. In fact, the best time you should be contributing to your retirement plan is in your early 20s, because the money will start to accumulate as years passes by.
It doesn’t have to be much at first, as you should never contribute a crazy amount of money if you need it for other things.
STAY OUT OF BAD DEBT
Debt is very easy to accumulate, but it’s important to identify issues before they get out of hand. If someone is going out too much and spending money they don’t have, after paying interest it could be very costly.
Before going into any type of debt, look into every other option out there. Maybe it means waiting for something you want an extra month or so to have the money needed to pay without a credit card. The amount of money owed can snowball in a hurry, so don’t get too caught up in trying to keep up with everyone else.
A CREDIT CARD IS NOT FREE MONEY
Along the same lines as that, you should never be thinking that a credit card is free money. Eventually, it needs to be paid off. Even with a good interest rate, a person is going to pay significantly more if they carry a balance month after month.
Try to limit yourself to only one or two credit cards. This ensures that people are not as tempted to just spend, spend, spend.
DON’T SPEND MORE THAN YOU EARN
This seems like a pretty simple concept, but too many people spend more money than they actually earn. This is a terrible habit to be in, and it is not going to be helpful for anyone. Until you land a higher paying job, stick to your level of means. Remember, lemonade funds will never pay off a champagne lifestyle.
HAVE AN EMERGENCY FUND
An emergency fund is slightly different than a savings account, but they are both used in case there is an issue. There is always a chance that life can change in a hurry, so having an emergency fund makes a lot of sense.
People sometimes use this fund when they are relocating for another job. You can also use it to help out family if someone finds themselves in trouble.
KNOW YOUR EXPENSES & PAYS ON TIME
Paying on time sets great habits for every person out there. Don’t be the one who is constantly behind on their bills. Not only does this possibly put a person in a bad situation from a credit card perspective, but it leads to recklessness in the future.
Expenses are pretty much set in stone every single month. You know exactly what needs to be paid. Take care of things and move on.
Hopefully by following these tips, you should be on your way to financial success!