Got money goals? Here are 5 financial habits that will help you achieve them.
Your finances are like the food in your fridge: if you don’t take a good look at what you’ve got in there every once in a while, there’s a chance things could turn sour. But budgeting doesn’t have to mean keeping an iron-clad fist around every dollar, it’s really just about creating better money habits.
Here’s a handful of ideas on what you could do differently in the year ahead.
Prioritise your debts
This one’s not much fun, but when you commit yourself to getting out of debt, you’ll reduce the amount you pay in interest, and free up your money to spend however you like!
Hauling a large sum out of your account and putting it towards your debt can feel overwhelming, so set up a realistic payment plan and don’t touch this dough, no matter what. Being debt-free gives you more financial freedom, stability, and improves your overall credit score rating which is important for big life decisions like getting a credit card or buying a house.
Check where your money is going
If you look at your bank balance and often wonder where all your money went, now’s the time to find out. There are lots of budgeting apps and tools out there that offer options to help you set spending limits and reminders. Seeing exactly how much you’re forking out for takeaway might sting at first, but in the long run you’ll come out on top.
Work out your essentials
It is important you make sure the bulk of your spending is going towards what you need. Write down one list of necessary spending categories, such as groceries, bills, transport, and healthcare, and one list of anything that falls outside it, such as entertainment, eating out, clothing and electronics.
Of course, don’t go cold turkey from all creature comforts or you’ll set yourself up for failure. Create an achievable budget each week to spend on the non-essentials and tell your friends or family what your plan is so they can help keep you in check. Should you lapse and a few fashion pieces weasel their way into your virtual shopping cart don’t beat yourself up about it – carry on with your plan.
Check your calendar for big spending months
The amount we spend varies from week to week depending on our social commitments. When we don’t factor in these financial ‘surprises’ we find it harder to fund them, which is why proactive planning is a must.
At the beginning of each month, write down every potential wallet-draining event and budget for it. These might include family coming to town, birthday parties, or seasonal events. Make sure you consider expenses for food, drinks, gifts, transport, and entertainment. If you’ve already got a solid weekly or monthly budget worked out then you won’t need to reinvent the wheel, simply reallocate some of your month’s spending into your social calendar.
Make regular budget meetings with yourself
Be honest. It’s unlikely you nailed your budget on the first go, and besides, life changes all the time. When you’re setting up your new budget, at the end of each month have a look at where you spent too much or too little and make appropriate adjustments.
Budgeting will probably take you some time to get the hang of, but once you’ve cracked it, you’ll be able to make the most out of your cash flow.