Being better with money is actually not as hard as it seems. With a bit of self-reflection, education and discipline, we can create a healthier financial life without feeling like we are sacrificing or that we must diligently track every penny.
Not being good with our money not only puts us at risk of a variety of ‘unpleasant’ situations, it also creates a lot of mental distress. If you want to be smarter with your finances, here are just a few helpful hints for getting on a better path.
#1 Educate Yourself
This may seem like a super-obvious tip, but it is something many people never really bother to do, interestingly enough. Studying money matters may seem boring, or it just never pops up on our radar. Many of us suffer with money problems due to sheer lack of basic knowledge and understanding.
f you really learned about the power of compound interest, you would probably feel a lot more motivated to start investing money. You would be all about maximizing contributions to your retirement accounts, and starting as early as possible.
If you knew how much money you were throwing away by only making minimum payments on your credit cards, you would probably be appalled, and do your best to pay off balances more quickly. Here is a great podcast episode I did a while back to help you out.
So, hop on a website aimed at financial education; take out a book from the library. You would be amazed how much of a difference it can make in your attitude towards money and how you spend it.
#2 What is Happening Now?
Take stock of what is happening right now. What elements would you like to change? Do you have a bit more debt than you are comfortable with? Is your lack of an emergency fund pulling at you? Are there certain spending habits you know need to change, such as eating out too much, or overdoing it on the weekends?
If you think of ‘budget’ as a dirty word, you want to adopt a different perspective on that. Look at it as a helpful tool to meet financial goals, and increase the peace of mind that comes with knowing you are managing your money responsibly.
You probably have no idea how you are spending your money. For the next month or two, carefully track your spending. Most likely, you will be surprised at how much you are spending on certain things.
This tracking can also help you identify patterns that can be reshaped, such as the tendency to indulge in retail therapy after a bad day at work, or charging items when you know you should be paying cash for them.
If you haven’t recently, look up your credit report to make sure everything is kosher. Inaccuracies are more common than you would think for such an important document. Even something as benign as an incorrect credit limit could lower your score, by negatively skewing your debt- to- available- credit ratio.
If there is inaccurate negative information, you want to begin the process of having it removed. You can do this yourself, but many people find the services of a credit repair company useful because of their expertise and ability to get things done faster. It is important to remember only true errors can be removed—don’t listen to companies that tell you they can scrub your report clean of any negative marks.
#3 Set Some Specific Goals
It is really difficult to make headway with our finances when we lack specific goals. To say you want to pay down debt, increase your savings, and what have you, are good places to start. But, these desires are way too general and vague to have any real impact.
There is nothing to sink your teeth into; nothing for your mind to latch onto. Without specifics, you will be hard-pressed to take truly effective actions. You need something on which to focus.
So, set some specific goals. If you want to increase your savings, set a dollar amount or a percentage of your paycheck that will automatically be transferred into a savings account. If you want to pay down your debt, run the numbers and determine a specific amount that will go towards it each month. Decide which debt you will tackle first.
Once you decide to be better with money, all you need to do is commit to taking certain actions. Take things slow, and be realistic. After awhile, it will actually become fun!
So what are some financial tips you have that you would like to share? Feel free to share your favorite financial tip in the comments below.