How to get your finances in order to push your money even further
Do you feel like your financial life has been flipped upside down during the coronavirus (COVID-19) pandemic? Or, has the promise of a new year focused you on getting your finances in order to make more of your money? Whatever the answer is, it is important that you adopt healthy financial habits.
However, just like bad habits can get you into financial trouble, good habits can assist in keeping you out of it – and help you spend wisely, save well and, most important, reach your biggest financial goals faster.
To help start this process, we have put together five habits for you to consider.
1. Pay Yourself First
Before you pay your bills, you should develop a habit of paying yourself first. That means saving and investing a slice of your money before you have the chance to do anything else with your earnings.
It is great to begin somewhere – saving something is better than nothing at all. The important thing is that you are building a new habit around making some of your hard-earned money work for you, as opposed to someone else. After you have paid yourself, the rest of your earnings can then be used to pay bills and buy the things you need.
2. Spending Less Than You Earn
The problem is that if you regularly spend more than you earn, you could be building up more and more debt. In most cases, that may result in turning to a credit card and not paying off the balance each month, leaving you with potentially exorbitant fees and interest rates that can take years to pay off. When deciding on whether to spend on something you want, always ask yourself if you genuinely need it.
3. Emotions Should Not Affect Your Financial Decisions
For many people, money habits are tied with emotions and how we feel. It’s easy to get carried away in spending money when we are disappointed, or angry, or even happy. While emotions are very important, they are not helpful when it comes to making financial decisions. Develop a habit of taking your time and making rational decisions about money rather than allowing spending, saving and investing habits to be dictated by the way you’re feeling at a moment in time.
4. Control Your Debt
Debt isn’t always necessarily a bad thing – in some cases, debt can be a positive stepping stone to help get you closer to a more prosperous future. In example, your mortgage is a form of debt – purchasing a home could be a necessity for you. Similarly, borrowing money to enhance your education in a way that could enable you to get a better paid job. You could even be borrowing money to set up a business.
The use of credit cards for extra spending, in example, is usually considered a bad use of debt, as the repayment terms and interest payments can often be onerous as well as expensive if it isn’t paid back on time. It is generally considered good practice to avoid carrying a credit card balance over from one month to the next, as over the longer term this can often become expensive, very quickly.
5. Speak To Your Professional Financial Adviser
When it comes to managing your money, planning to build wealth, securing your future, and, above all else, drawing up an effective plan for fulfilling your objectives, seek professional advice. They will provide a wealth of knowledge, qualifications and experience that is difficult or impossible to achieve yourself.