If you are anything like most Americans, you are probably working 40+ hours a week and you are most likely living paycheck to paycheck, uncomfortably.
Did you know every year the value of a dollar goes down and the cost of living goes up?
How does one go from living paycheck to paycheck to financial freedom?
You know what they say, money comes and money goes. If you plan to keep up in this economy, you will need to develop some good money habits that can help you save in any and all areas possible for savings.
In this article, we’ll talk about 8 good habits that most successful people tend to have.
Review Bank Statements
Reviewing bank statements or spending accounts, on a monthly basis at bare minimum.
Guess what, more often than not, machines and people make mistakes. It’s wise to review you bank statement regularly for a number of reasons. There could be some account errors or unauthorized purchases, there could be visible patterns of spending habits hindering your saving abilities, and this also can help you ‘balance’ incoming and outgoing money.
It also helps to be aware of you current balance in between purchases.
Evaluate/Track Repeated Spendings Habits
Take a mental or literal note of the things and reasons you frequently spend money.
Determine if there are any repetitive transactions you made that you could have gone without or that you would categorize as unnecessary.
This is a great starting point when looking to save money somewhere and you also have the opportunity to learn a lot about yourself using the information you find.
You might learn, for example, you buy more personal products than you assumed, this realization could lead you to one of two things. Either you start obsessively rationing your personal products or you start buying in bulk for the cost savings.
I learn my “let’s get snacks” and my “we deserve good meal” habit was becoming embarrassing costly. Like, I was basically eating my money. So I learned those purchases were unnecessary and were the result of stress. Being they were causing stress, I could cut ties with that bad habit holding me back financially.
Pay Yourself First
The easiest way to make the concept of paying yourself first make sense, is the fact that like most things in life you, yourself are a pricey responsibility that must be taken care of or nothing else will be.
You must invest in yourself and your needs. Put some money towards your savings or next investment before you pay every last bill or make unnecessary impulse buys.
You have to think of your needs as a requirement or a bill, just like, rent or a car note. If that Bill don’t get paid, it’s gone be trouble. The trouble, in this case, would be long term unhappiness and imbalance.
Create and Follow a Budget
To make it simple, a budget is a personal finance plan.
In a budget, generally, the monthly income is calculated, expenses are calculated and deducted, and goals would be established for any remaining income. This is another good money habit to have that combats impulsive spending. So long as you follow the created financial budget, that is.
We recommend looking at the expenses to determine if there are any categories you can decrease costs by making some changes.
If you choose not to create a goal for money left over after your monthly expenses, like a saving plan or business idea, you run the risk of costing yourself money and picking away at it with small impulse buys.
Compare Various Businesses Prior to Making Large Purchases
You might be thinking, “why would I do that?“. Well, I’ve heard of love at first sight, but purchasing at first sight is just as risk of idea.
There’s a chance you may have gotten the best deal, but there’s also that chance you might completely regret your decision.
Thanks to the development in technology and social media, comparing the pros and cons of purchasing an item or service with a number of companies has never been so quick and simple.
Take a brief moment to compare competing companies by their pricing, customer service, quality, and other desired variables via their company websites and social media accounts.
Most importantly, this money habit it to help you save money when making purchases of all sizes.
Educate Yourself in Financial Literacy
If you take nothing else from this list, please expand your knowledge in financial literacy.
There are too many people, who don’t understand, credit and interest. There’s a huge market capitalization off interest and the lack of knowledge people have regarding interest.
Financial Literacy includes credit, interest, banking, and anything else that involves buying, selling, and borrowing.
You know what they say, “knowledge is power”. Give yourself the power to take control of your finances.
Buy Assets not Liabilities
To make this money habit simple, I’ll define liability and asset in the shortest terms. Liabilities cost you while assets provide value to you.
What is classified as a liability or an asset can differ from person to person, as everyone has their own individual needs.
Think about the things you currently use. Your car, for example, is it an asset that help you generate income or is it a liability that’s constantly costing you that you could live with our?
Also think about you future goals and investments in the same way. Will they help or hurt you financially to obtain and maintain these goals?
Stop Trying to Keep Up With the Jones
I’m sure you’ve heard about Jones. All we need to know about the Jones is they are a wealthy family that keep up with the latest, greatest, and most expensive of any and everything.
With financial purchases, decisions on wether to buy or not to buy should be based on personal needs and not what other people are doing.
Imagine buying the new iPhone every year to be in competition with someone rather than with the intent of taking advantage of the now available capabilities. Both ideas are still costly, but the latter is more likely to be satisfying and to bring value.
A goal to keep in mind with this money habit is to spend with personal intent in mind and avoid using the intent of others as motivation.
Conclusion
If you would like to escape the 9-5 race and living check to check, it would greatly benefit you to develop some good money habits and get rid of any bad habits sooner than later.
There are tons of money habits you can develop that can save you money or even lead to paying you money. The eight we mentioned are:
Review Bank Statements
Evaluate Repeated Transactions
Create/Follow A Budget
Pay Yourself First
Buy Assets, not Liabilities
Educate Yourself in Financial Literacy
Stop Keeping Up with the Jones
Compare Competiting Businesses for Best Prices
Choosing to be consistent with even just a few of these habits can show extraordinary financial results.
What’s your most beneficial money habit?
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