By reading this post, you have made the decision that most people unfortunately don’t, which is to begin creating better money habits essential to mastering your money. With this article, you will learn some fantastic tips to develop better money habits.
Let’s dive in!
1. Master financial literacy to master your personal finances
This point is so crucial, but financial advisors usually overlook it. We are just not taught how to take care of our own personal finances and, unless you study a financial field, it’s unlikely that you are going to fully understand its terminology and best practice on how to manage money.
There is now a plethora of good, free information and courses online. And the number of books that decipher complicated financial processes into an easy-to-understand way has grown exponentially in recent years.
2. Set clear money goals to help you achieve financial freedom
Putting financial wishes down on paper is a powerful action, as you turn a dream into an achievable goal.
We recommend you follow these tips:
- Be specific and realistic with targets.
- Set milestones. A weekly figure of saving $50 is much easier to digest than say $3,000 in six months.
- Download a money management app to help.
3. Make a monthly budget with ease (this one is particularly key to developing better money habits)
Think of any business. Budgeting is one of their most important tasks. OK, you’re human, not a business, but people and businesses alike need a flow of cash to survive and thrive.
So, let’s learn from the business world by creating a monthly budget. Check out our 50/20/30 budget plan right here to get a kickstart for your awesome new budget!
Perhaps include an image of the 50/20/30 plan from the budgeting the non-boring way article?
4. Track every single expense
If you’re like most people, you have some idea of where your money goes, but we bet you’d be surprised to see where it really all gets spent! This is why it’s so important to track your expenses.
Expenditure tracking allows you to see exactly where you are spending and where you can make changes. Learn from millennials. This generation is remarkably savvy with money, in large part because the Global Financial Crisis hit them hard.
They know how to budget well; be thrifty; create good money habits with the help of technology; and save in a disciplined manner.
5. Pay yourself 10% of your income first
Most people spend their entire monthly income, whether they earn $1,000 a month or $5,000 a month. In fact, 76% of people in the United States have admitted to living paycheck to paycheck. 76%! Is this you?
One sure-fire way to shore up your finances is by following these 2 steps:
- Open a savings account. It’s important to shop around for the best terms and type of account that is most suitable to your needs. Savings accounts vary widely.
- Set up a standing order for 10% of your salary to automatically go straight into this account at the beginning of each month.
If 10% is too much, go for 5%, or if you feel you can save more, why not ramp it up to 20%?
Better money habits: The final word
A dieter who goes cold turkey and cuts out all the good stuff usually leads to falling off the diet wagon, right? Well, learning new financial habits is similar. You can trim your spending and apply these personal finance tips, but going out for a meal or the movies, or grabbing a coffee are part of life’s treats. It’s important to be disciplined and committed to master your money and develop better money habits, but to also enjoy life.
Forming habits takes some time in the beginning, but once you break through this period, your finances (and life) will be all the better for it!