Tips to Help You Establish Great Financial Habits
(The following is a guest post)
Establishing great financial habits are essential to your financial success. There are several things you can do to establish good habits to help you accomplish your financial goals. First thing is always to save early and often, especially if you are just starting out. The good news is that it is never too late to develop good habits.
IF YOU DONâ€™T SEE IT, YOU WONâ€™T SPEND IT
With employers who use direct deposit for their employees, it is easier than ever to save money. Many banks allow a paycheck to be deposited and then an automatic draft from the deposit into a savings account or money market account. Itâ€™s a great idea since your money will be automatically deducted from your checking or transaction account. You only have to sign up for the service once and then it automatically is deducted. You never really have that money available to you and so you arenâ€™t tempted to spend it on something else.
TRACK WHAT YOU SPEND
Tracking what you spend your money on isnâ€™t the most fun activity in the world, but it will show you where your money is going. So when you look at your budget and wonder where that extra money went, you can see what it was spent on. Therefore, you can make informed decisions on your budget. This can also help with reducing your debt because that extra money you are spending could be applied to outstanding debts which will disappear sooner.
INVEST, INVEST, INVEST
When you find extra money at the end of the week or month, put it in an extra account and consider investing it, provided your monthly expenses are all paid. This investment will grow over time and you will end up with a tidy sum later on.
SAVE FOR A REASON
Itâ€™s easy to talk about putting money aside for â€œsomedayâ€. It can be harder to do. If you want something expensive that is not in your ordinary routine, save for it. It can be a great vacation, a new car or just an evening out. But make it something you will look forward to.
Many financial advisors and planners donâ€™t discuss how long it may take to reach your financial goals. But you need to realize that it wonâ€™t be overnight. Unless itâ€™s an emergency, donâ€™t rush to make a major purchase. If you have to make the purchase on credit, it will cost you more because interest will be tacked onto the cost. So save for your dream vacation or that new car you want. But if the refrigerator breaks, you may have enough saved to purchase it without credit thereby saving you money. In circumstances when a loan is required, make sure you shop around and completely understand the terms of the loan you are applying for.
Establishing great financial habits may not happen for you overnight. But if you make a concerted effort, track your expenses and stick to your budget, it will happen. Be disciplined and think about your goals realistically and logically. Go ahead and start today. That great vacation or car or evening on the town is right around the corner.
The Warrior says
The almighty patience. That is the toughest for me.
My biggest problem is being a trader versus investor. I am starting to build my investing position while allowing a small “trading” position to satisfy that urge if you will.
If I teach my son one thing as he grows, it will be the value of patience. Not only does it help financially, but in many aspects of life.