planning

HABITS: Developing excellent financial habits

To become truly responsible in life, you need to keep your financial affairs in order. This may sound easy, but it requires a great deal of focus and discipline. You also need to go against the grain and break free from your negative habits. Since entire habits cannot be hammered away, you need to develop excellent financial habits instead.

So, if you’re serious about improving your sense of financial responsibility, you can now start adopting these simple habits:

Create A Simple Budget Plan

While a budget can appear intimidating, it’s very important in handling your financial obligations. We tend to get distracted with unnecessary purchases, thus leading to shortage. Always write down your monthly income and itemize your payables. And don’t forget about the little things like daily Frappuccino or your fast food lunch – they will add up later. You can jot down these daily items in a small journal for greater clarity.

Fine-Tune Your Finances

You can approach this in two ways: dedicate an hour over the weekend to review all your current bills, or, you can review bills as you receive them. If you find questionable charges, investigate them like an operative. Cut them down swiftly if they don’t serve specific purposes.

Next, contact all entertainment providers to see if there are any current discounts available. You can even assess and remove services or features you don’t use or that aren’t worth the cost. Remember, your providers aren’t going to tell you how to reduce your bills – it’s up to you to find out about promotions and streamline your services. If they present a tempting offer, always ask yourself if it’s worth the additional expense.

Tighten the Belt

Entertainment is a necessary factor in our lives. Without entertainment, we’ll be like zombies dragging ourselves towards misery. However, it’s also necessary to avoid overspending in this area, especially because it’s easy to get carried away. Otherwise, look for free activities in your area. Free music is fairly easy to come by and your local park won’t charge you (or won’t charge you much) to enjoy a relaxing picnic. Beef up your creativity – it’s good for your mind and wallet.

Another unique strategy that you can apply is to take out a personal loan. But where will you use it? Apart from emergencies, you must use it to fund a side hustle or investment. While doing this, you need to maintain your job or income sources. Someday, your investments will pay off and you’ll be debt-free!

HABITS: Basic ideas of saving

You may think that saving money is easy. However, it requires constant planning and a major change in financial decisions. More often than not, an unexpected event will put your budget in disarray.

If you’re serious about saving, then you should create a list of options or reasons that can fuel your savings account.

Here are some basic ideas you can try:

Rainy Day Fund

You probably heard about the old adage that you must have three months’ worth of savings. This is a sound strategy that can prepare you for emergencies.

Start with living expenses. Add up three months’ worth of rent or mortgage payments. Look at your utility bills and add three months’ worth of each to the total.

For more variable bills, like electricity and heating, use numbers from the more expensive months in your calculations. Use receipts and bank statements to find out the typical costs of monthly groceries and supplies.

College Education

College is one of the costliest endeavors that you’d encounter if you’re a family person. This is the reason why you need to get a proper headstart in savings whenever possible. Saving for college, however, should probably be on the lower end of your priorities, well behind building up an emergency savings account and saving for retirement.

Thanks to the ready availability of financial assistance and tuition loans, it isn’t a necessity to have funds saved up in advance. Bide your time for college education expenses, and always keep your income level above the waters.

Home or Property

You can now buy a home or property with little cash on hand. Over the years, you have to grind hard to repay the value of the home. Without getting too bogged down into the science of mortgage rates, the more you can bring to the table as a down payment, the better off you’ll be. A sizable down payment means more initial equity for you and less risk for the lender, which can help you get more favorable terms.

Retirement Fund

During your golden years, you must have a financial stash that you can use. All over the world, the average age of retirement is 63. Life expectancy is currently 78.8 years. If you play your cards right, you’ll have decent savings to see you through the golden years. If possible, you should work with a retirement counselor so you can make the right plays.

One good angle that you can adapt for your savings is the ‘journey mindset.’ The act of saving itself is a journey, and you must fill it with positive things and actions. Save a specific percentage per month, and do your best to multiply your income sources.