Every day we make choices about how weâ€™re going to spend our money, where weâ€™re going to spend it and why. Our financial life can be significantly impacted by these decisions, whether weâ€™re adding to a mounting credit card bill or weâ€™re treating ourselves after a tough day at the office. But these impulse buys can add up over time, which is why itâ€™s important to try and reprogram your mind to make sound financial purchases, no matter how big or small they are.
Where is All Your Money Going?
If you arenâ€™t keeping a record of your expenses, youâ€™re not going to know how youâ€™re spending your money and where you could make savings. When you monitor your spending, it can help to make you feel more in control of your finances. So, start by asking yourself questions about your spending habits, such as, are you a savvy shopper, do you have a large balance on your credit cards, do you know how much youâ€™re spending every week or month and do you put money away in a savings account?
Once youâ€™ve discovered how youâ€™re spending your money and what habits you maybe have, youâ€™ll be able to start changing your expenses.
How Can You Change the Way You Spend Money?
You may discover that youâ€™re already managing your money properly, which is great, but if you arenâ€™t, you might want to look at how you can manage and change your saving and spending habits. Being able to manage your financial life will help you to put the right steps in place for your future.
However, if youâ€™ve got into bad spending habits, these can be hard to break. So, hereâ€™s how you can break them:
Ask Yourself What You Get Out of It: If youâ€™re prone to spending lots and donâ€™t put much aside for a rainy day, ask yourself what youâ€™re getting out of your purchases. In most cases, the answer will be that you just enjoy purchasing stuff.
What are the Implications of You Buying Things: Next, consider what negative connotations there are for buying these things. For example, if you decide not to pay your electric bill in favor of a shopping spree, youâ€™re only gaining temporary things but could be losing out on an important service. And, if you donâ€™t save money, you might not be prepared for emergencies in the future. Looking at your purchases in this way may help you to see that these arenâ€™t good choices.
Think About What Youâ€™re Buying: Next time you go to buy something ask yourself whether you really need another pair of shoes for your collection or the latest widescreen TV. Ask yourself whether you can afford it and what itâ€™s really costing you.
Replace Bad Habits with Good Ones: If you want to get rid of your bad habits look at how you can replace them with equally enjoyable but good ones. For example, instead of impulse buys that arenâ€™t necessary, start shopping for something bigger, such as a house or the best SUVs to get for your family. Having this focus will take your mind off your bad habits and will also enable you to prepare your finances for the future.
How Can You Manage Your Money Better?
Now youâ€™re focused on spending your money more effectively, try to manage your finances better. You can do this by planning ahead, giving yourself realistic goals you can work towards, e.g. saving a certain amount of money a month to go towards the deposit for your house. Youâ€™ll also want to create a budget, so you know where you are and where you want to be. This will allow you to put together a financial plan of how youâ€™re going to achieve your objectives.
Once youâ€™ve done this itâ€™s important to keep a record of your spending so you can monitor how your finances are coming along. Keep track of all your financial transactions such as checks and bills so you know exactly what your financial situation is at any given time. And stay focused while youâ€™re doing this by remembering exactly what it is that youâ€™re doing this for.
As you put these plans in place, you may realize just how easy it is to save money. So, start off by saving small, manageable amounts but increase this as you go along. In a short period of time, you might be surprised at just how much money you can put aside each month, enabling you to purchase the car or house of your dreams while also putting money aside for the future and in case of emergencies.
Callum McKenzie is a Father who shares his stories and tips for better personal finance management.
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