As habits make a person, same way financial habits make financial future. If you are able to change your habits for good in every area of your life, it can improve your life and life goals. As with other habits, habits about how you handle your money takes you on the journey of a secured financial future.
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If you don’t pay attention to how you spend money then there is a big chance that you will not be able to save or grow your wealth. To save yourself from going broke, it is important to cultivate good money habits. Although these are really simple actions but have a big impact on your financial health. I know that everybody knows about all these things but when it is time to take action, we somehow forget the very simple tips.
” Beware of little expenses. A little leak will sink a great ship.” Benjamin Franklin
Even little expenses matters along with the big ones. The big expenses are always easy to watch but little expenses become less important but if not tamed, they can make big holes in our finances. I very much love simple and small savings which really become bigger as the time goes.
1. A manageable mortgage is one of the financial habits you need
Housing, whether it is a mortgage or renting, takes a big chunk of your income. If you really want to save money for your self, it is in your best interest to downsize your house. Downsizing not only helps in saving yourself from spending too much on the mortgage but will save yourself from cleaning a big house also.
Saving enough money for a down payment before buying also saves money on the mortgage.
2. Forget about expensive cars
Everybody loves big fast expensive cars. But the actual thing is they cost a lot. The only reason for having a car is to transport you to and fro. It can be done in an inexpensive car also. So why to spend on big cars. Big cars need more fuel and also you have to shell out more money on their maintenance.
If you are on tight money or you want to accomplish your financial goals as soon as you can, then go for smaller cars.
3. Not spending too much on entertainment
Entertainment is classified into TV, outings, leisure travel and many more things. Don’t stop entertaining yourself but keep your spending under control. Spending too much on entertainment can make you broke. Go for free entertainment wherever possible.
It is a good idea to travel for leisure but you should plan and allocate some fund for that before travelling.
4. Using credit cards wisely or not at all
I have seen some people who go on holidays on credit cards. They spend money from their credit cards and then they work twice to pay that credit card debt. Instead, they can save money for their holidays and save themselves from the stress of credit card debt.
Buying anything big or travelling on credit money is not a wise thing. It is better to hate credit cards instead of loving them.
5. Controlling your habit of spending on impulse
I sometimes get this impulse just to buy anything even if I don’t need it. At that time, I really have to tell myself “do I need this or can I spend this money on something else”. Sometimes this work but sometimes I just buy anyway. This impulse buying is not good for your wallet.
This happens if there is something going on in your mind and you just want to make yourself happy. Try to find out other means of happiness because after spending a big chunk you may feel guilty of spending.
6. Spending more than you earn
It is not wise to spend more than you earn, this way you will always be in debt. Spending that money which you don’t own is the worst scenario. First, save your money and then spend which is left. This will save you from going broke.
7. Saving each and every penny
Without saving any money you will not be able to grow your wealth. Always save as et amount of money. Automate your savings and you don’t have to think about saving any money.
What you can do
Automate your savings and pay your self first. After spending on your household, save whatever is left. It is like saving each and every penny you earn.
8. Stop spending on gambling and lotteries
When you are going through financial hardship, you look for easy Spending on gambling will not make you wealthy. Only casino people are becoming rich this way. You will only grow wealthy with the correct mindset about earning and saving money.
9. Setting clear financial goals
Having clarity about your financial goals is as important as anything else in life. Clear financial goals will urge you to save for your future. It is always clarity of what you want which helps in taking action. For example, you will be able to put say 100 dollars every month into your emergency fund when you know how much you want in your emergency fund and in how much time.
Emergency fund = 5,000 dollars in 2 years.
You need to save almost 209 dollars a month for 2 years.
This is just an example. Your emergency fund goal can be bigger than this or smaller than this but it should be time-bound. Taking action becomes very easy with the time attached to it.
10. Budgeting and sticking to it strictly
Not budgeting will let you feel like you have all the money for spending and you will spend without thinking and at the end, you will not have any money for saving. I always thought about why everybody shouts about the budget. Now I know why budgeting is not only for big projects or governments to take care of big country budgets.
Budget is as important for household finances also.
11. Saving on utility bills
Try to cut your utility spending. Not paying any attention towards your bills and usage of utilities will take a big chunk of money from your wallet. Keeping lights on when you don’t need and washing a very small load of clothes in a big washing machine will let you spend a lot on water and electricity. Be mindful of these things.
12. Setting financial goals
Not setting any financial goals will make you wonder how to save money. You will be confused, which account needs to be supplemented with how much. If you set your financial goals, you will be able to measure your success in terms of money.
As professional goals are important, so are the financial goals. Your financial goals must be divided into
- Long term goals
- Midterm goals
- short term goals
After having set your goals, work daily for your goals. When you set your goals and classify them into long term, short term and mid-term, it becomes easy to work towards them.
13. Dreaming of money and not taking action
It’s okay to dream about everything beautiful and good including having lots of money. But only daydreaming and not taking any action to save money is not going to take you anywhere. Taking action is crucial in every sphere of life. Start your saving now.
If you need to take another work, just do it. If you want to start some side hustle, start it straight away. Too much daydreaming and not doing anything will make you lethargic. You will not be prompted to take action to save any money.
14. Stop spending as a hobby
If you feel like you are a shopaholic, please change this habit. You will not be able to save any money. I have seen people who can spend all the money before their next paycheck. They don’t realise, these paychecks can stop anytime. Anything may happen. Spending becomes a habit. They feel enjoyment in spending money on things even if they don’t need it.
15. Expensive gifts
Always go for affordable gifts for your family and friends. Gifts are making everybody happy. Gifting very expensive things can make a big hole in your wallet. Always gift according to your budget. Those gifts which are gifted with love are the best.
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These are my favourite habits with regard to the money which saves a lot of money. Please tell me in the comments about how you save money and have changes your money habits. I would love to hear.
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Gursimrat
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