It is said that over time you get wealth based on your habits. The opposite is true. There are habits that can keep you financially poor for ever. The main question is how do you identify and stop these financially crippling habits? The following thoughts can help you get out of the hole.
- Improve your savings habits. Most people get an income, then minus their expenses and whatever is left, is considered savings. This is wrong. When you get an income, minus what you want to save and then whatever is left is what you have for your expenses, now learn to live within that.
- Our lifestyles determine how we handle money. A change of lifestyle results in changes in financial behaviour.
- Track your expenses. Believe me you will be surprised where your money is going. Track everything, from the smallest expense to the largest. Do this for a month or two and group them up into categories.
- From your expense tracking, see if you can unilaterally cut down a portion of your expenses and utility bill. Don’t say it cannot be done. It’s doable. Just try it.
- Small expenses add up. They produce a compound effect however in the negative direction. Be very cognizant of that.
- It takes time to change financial habits and to be proficient. But you must not give up.
- Seek advice of a financial advisor who specializes in the deflation of debt and help people get out it. Even if you have no debt, it is your financial behaviour that is causing you to be poor. You can certainly improve upon it.
- Aim to increase your income and decrease your expenses. Easier said than done, but if you can reduce your expenses by say 30%, try to see if you can increase your income by 10%.
- Pay off the highest interest items first (like credit cards, revolving credit etc.).
- Cut and throw away your credit card. Learn to live within your means, and not on borrowed money. Remember that the habit of borrowing is a poverty related habit.
- Your debit card is all what you need. You do not need to dig a financial hole.
- Eat at home. It saves a lot of money, same with boozing. Drinks at bars and clubs are extremely expensive.
- There is no shame in going generic. Sugar is sugar no matter which brand. The goal is to save. Buy generic products because they are less expensive.
- Do not live to please people. No one can tell if you’re wearing a $100 cologne/perfume or off the shelf Brut. No one will ponder how come you are wearing $25 jeans. No one. No one will care if you don’t show up at a club or a party or at the cinema. You are doing this for yourself.
- The money you save will make you happy. It can come in handy sometime. You can use it to better your life or to do the things that matter to you.
- When tempted to spend. Just drop the thought. Impulse is the biggest killer of savings.
- The effect of peer pressure on finance is real. Consider changing some friends who you tend to compete with or who you want to keep up with. Remember you have a unique financial path as an individual or as a family.
- Each time you go shopping make a list and stick to it. The moment you finish the list leave the shop.
- Do not go to the mall unless you have to. In general people who spend more time in the shopping mall spend more than those who stay at home.
- Only you can discipline yourself. If you’re a family man, explain it to them. They will understand. Sometimes you might give in to pity, that’s okay too, we are all humans, but think of it as a bad habit. If you improve yourself, you and the family become the eventual winners.
- Avoid the habit of matching your expenses to your income. Instead, next time your salary goes up or you receive an unexpected sum of cash, don’t change your lifestyle, but save the difference.
- Re-evaluate the expenses you make to the extended family and the donations that you give. Cut unnecessary waste.
I hope these ideas will bring a positive effect to your personal finance.
Our articles on the Personal Finance category will give you more ideas to consider.
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