People develop so many bad habits: drinking, smoking, gaming, etc. The world would be in a much better place if only people develop positive habits. And every person would have a better future if the positive habit they develop is on their personal finances.
Here are some personal finance habits that would be beneficial for you and your future self.
Tracking your income and expenses
This is really taxing but it works wonders. Track your daily expenses and then evaluate them after a month. It is only then that you will realize how much you actually spend on a certain item every month. Some of them will shock you to the core. For example, food is important. We need food to live and that’s why we don’t always keep track of how much we actually spend on food. But when you track your daily food spending, you will somehow realize that maybe eating at a restaurant every week is not really necessary. Or maybe your soda intake could be lessened, after all, sugar is not good for you. Doing this—tracking your expenses—will also allow you to weed out a lot of unnecessary spending. Did you really need to buy a new shirt? Your iPhone is still working, why do you need to upgrade? Only when you study your spending habit would you realize just how much money you’ve wasted on things you don’t really need.
It is also important that you track your income to make sure that you are not spending more than what you are actually earning. Also, you have to study your paycheck to ensure that you are getting all the earnings you deserve and that your employer is deducting the right amount off it for taxes and benefits.
Don’t buy anything on the first visit
When you want to buy something, make it a habit to not buy it on the first visit. Yes, it could be a waste of time but it could also save you some money. Say you really want to buy a new bag and you already have something specific in your mind. So you visit the store and check it out. Don’t buy it. Go home and sleep on it. Listen to your heart and your mind. You have to consider if your mind agrees with what your heart really wants. Because the bag that you want may not be as practical as it seems. Maybe there is a cheaper bag out there that is just as aesthetically pleasing and just as durable. Give yourself a chance to look at others.
Never buy on impulse. Almost always, this ends in regret. Window shop for things you want or ought to buy. Then take a step back and allow time to help you decide.
Make a list when on a grocery run
Think about the things you actually need when you go to the groceries and stick to that list. Again, don’t buy anything on impulse.
Pay your bills as soon as you get them
Have you ever been billed a penalty because you were late in paying your bill? Sucks, doesn’t it? So make sure you pay your bills as soon as you get them. Pay online if possible. This way, you don’t get sidetracked by anything that might lead you to spend unnecessarily.
Also, it may be time to reevaluate your bills. Is there any way to minimize your electricity bill and phone bill? Also, do you really need cable as well as subscriptions to Netflix, Amazon and Hulu? You are at work for around eight hours anyway. How about that gym membership, do you actually go to the gym? Also, about that gym membership, perhaps jogging and walking in the nearest park are worth considering as alternatives. The good thing about going to a gym is that an instructor could help you out with your exercise. However, if you want to save, walking and jogging could be just as good as fitness routines go. Also, being enveloped by nature while on your fitness regimen is a good deal.
Use coupons when you can
This is in no way suggesting that you turn into an extreme couponer like those people on television. Being an extreme couponer is actually a full-time job of sorts. But when you do see a coupon, you might as well use it. When you just use one, the savings seem negligible. But when you use at least 10 of them in a week, the savings is significant. This is why tracking finances becomes helpful. It is only when you record them that you can actually see the actual significance in numbers.
Set aside a “slice of pie” from your paycheck
This is just an example to give you a picture of what it means to set aside an extra part for savings. Say you receive your two-week paycheck. There are 14 days in two weeks. You decide to divide your money into 14 parts. The dividend is your budget every day. Add an extra part for the future. This means that instead of dividing your paycheck into 14 parts, you divide it by 15. Save the 15th part as emergency savings or your retirement fund. This doesn’t mean that you should not take advantage of your company’s retirement fund. Your personal savings is just an additional financial source for you in the future.
Again, this is just an example. You can find another way of dividing your salary, just make sure to have an extra part for the future.
Keep your cash to a minimum
When you have a lot of cash in your wallet, you have the tendency to not second-guess yourself when you buy something. You become impulsive again. But when you keep your cash at a minimum, chances are you will not spend it over trivial things fearing that a more important expense will come your way.
Set aside salary increases
So you have lived off with your current salary for quite some time. So if you do get a raise and a bonus, set them aside in cases of emergency or as part of your retirement fund. You could also increase your 401(k) contributions.
With all these messages of “you only live once” or “living in the now,” people tend to overspend their money on what makes them happy without thinking of the consequence of the future. This mindset should be changed. Living a happy life should not be about the present because life is from now until the end. Besides, saving for the future doesn’t mean depriving yourself with what makes you happy now. It only means that you don’t have to spend everything today; leave something for tomorrow.
