Making poor financial decisions is easier than making good ones, and that’s a fact. We get wrapped up in what we want, rather than what we can afford, and before we know it, we can have a serious financial situation on our hands. But making the right decisions now can shape the future of your life. Even if your track record is poor, you have debt, or you have no savings to speak of, the future of your money starts today.
Understand your budget
Everyone has a daily, weekly, monthly, and yearly budget. From multi-millionaires to the average Joe on the street, we all have to live within our budget. Failure to do so is how multi-millionaires sink back down to being average Joes, and average Joes find themselves in real financial difficulty. Overspending is one of the leading causes of problems. Throwing money at a situation, whether it’s stocks and shares, a new car, or a new cell phone, without fully considering the repercussions of this action, can leave us in dire straits.
Spend some time today understanding your budget. Write down your income per month. Next to it, write every outgoing that you can’t avoid. This will be rent, utilities, transportation, loan repayments, insurance, cell phone bill, etc. Next write down your groceries bill, without the luxuries that inevitably end up in your cart. This is the basis of your budget, any money left over each month can be saved and spent on luxuries, but if savings or luxuries go over this left over money, you will find yourself in debt or unable to pay a bill. Understanding this budget it the key to smart financial decisions, and the first rung on the ladder to success.
Your daily expenditure is one thing, but what you choose to do with the money you don’t spend can completely change the course of your financial future. Saving your money intelligently – rather than in a shoebox under the bed – means you can reap the rewards. It’s all in the attitude. When you get to the end of the month with money left over (congratulations), don’t consider that money to be spent next month on a blow-out shopping spree or an expensive meal. See that money as a contribution to your future, and put it into a savings account. If you do this every month, and you spend some time understanding the strengths of various savings account, you’ll have enough for a new car, a deposit on a house, or a great safety net for the future.
Say goodbye to debt
Debt is not a financial position anyone wants to be in, but eight in ten citizens of the USA are in it. Student loans, car finance, and mortgages make up the majority of debt, and those are stable positions to be in. Credit card debt, on the other hand, is shaky ground, with high-interest rates making it difficult to pay them off. Understanding how to manage your debt is the key to escaping it. Advice on debt management from Money Expert will allow you to create a plan to leave the debt behind you, and stay there. Wouldn’t that be a weight off your shoulders?
Live with cash
Living in cash, rather than credit, is a great way to avoid getting into debt in the first place. If you can’t afford the lifestyle you want, a credit card isn’t the answer. Make sacrifices to avoid the debt. Otherwise, you’ll regret it years down the line. If you want to use a rewards credit card to take advantage of your spending, that’s absolutely fine, as long as you pay it off every month without fail. The main issue is when people start to use credit cards instead of cash to pay for their love of high fashion or fancy cars, and they’re unable to pay off their debts in a timely fashion.
Choose the right account
Having the right bank account for your needs is a good way to take control over your finances. Some will offer a certain percentage APR as long a set amount is paid into the account every month; others might even offer lifestyles benefits such as cinema tickets to lure you in. Choosing the account that works for your income and outgoings, and gives you the most interest for your savings, is the key to making the most of your money while it’s in the account. Ensure your bank offers online banking too – being able to keep a close eye on your balance is the key to making well-informed, smart financial decisions, and helps you to avoid the awkward situations that occur when a card is declined.
Look to the future
When you plan ahead, you make financial decisions which aren’t just for today, but for the rest of your life. This could be smart payments into your 401K, starting a savings account for a home deposit, or buying a house at a good time in the market. The younger you are when you start investing, the better your retirement will be.
Thinking long term also helps you to understand how your unnecessary daily spends add up. Consider this: a coffee from Starbucks costs you $5 a day on your way to work. If you make that $25 a week, that’s $1,300 a year, just spent on coffee. If just that money goes into a savings account from the age of 30, every year, that’s $45,500 extra you’ve saved before you retire at 65. That saving, by making your coffee at home instead of grabbing it on your way into work, can make a huge difference in your future.
Don’t turn your nose up at insurance
Many people see insurance as an unnecessary expenditure. Sure, you’re probably not going to have a fire and lose your home, or die and leave your family with a house to pay off, but what if those things do happen? Isn’t a few dollars a month not worthwhile to stop you from becoming homeless and belongingless in the event of a catastrophe?
Your financial future starts today, so start making smart decisions and see how your money blossoms.