If you are like a large part of the population, you are likely to feel that saving, spending less and having good habits when it comes to your money are difficult to achieve. If you identify yourself, it may be that some unconscious thoughts are preventing you from moving forward, building wealth and saving more. The good news is that you are not alone.
Most of us are not in the habit of controlling finances, which leads to a life of constant financial insecurity. If you feel it is time to take charge of your relationship with money, then this article is for you.
In the following lines we will give you some tips to help you get in the habit of controlling finances. Check-out!
1. Know your finances intimately
Answer quickly: what is your income? How much debt do you have (in loans, financing, credit card, etc.)? How much do you spend per month on food? Where does most of your money go?
Almost without exception, people have little knowledge of their personal finances and have no idea how the money “suddenly” disappeared from the bank account. When this happens, it is because they underestimate the importance of knowing in depth how much they spend on a daily basis.
This type of behavior makes the individual spend more than they should and subtly end up in financial difficulties. Understand that whenever we see someone in debt, nothing happened overnight. It took a whole process to develop in front of the person who, unfortunately, had his eyes closed.
So, to get into the habit of controlling finances, the first step is to understand the amount of money that comes out of your account and where exactly it is going. In other words, it is essential to know what your cost of living is.
The tip we usually give is to spend a month writing down everything you spend. Put your daily expenses on paper, on a spreadsheet or use an app for personal finance.
After 30 days you will have an idea of your fixed and variable expenses, the first of which are essential and must be paid every month (such as housing bills, school fees for children, grocery shopping, health insurance etc.).
Variable expenses are those considered not essential for your survival. Clothing, going out with friends, traveling and car repair are on the list.
This analysis will allow you to understand what happens to your money every month. If you need help, check out 4 tips to cut superfluous expenses.
2. Create a budget (and follow it)
The word “budget” can cause different reactions. There are those who see budget control as a kind of plague. The reason is very simple: it requires self-discipline and a lot of organization.
But if you are aiming to make a habit of controlling finances, you will have no way of escaping the budget. There are several methods to assemble it and in other opportunities we address two:
- Pot Method
- Method 50-30-20
Regardless of the method you use, remember that the budget should not just be something for you to look at from time to time. Once he has been created, stay true to him.
3. Set realistic goals
There is no point in creating the budget if you decide to set financial goals far beyond your portfolio’s ability to follow them. Want to take a trip? Great! But it may have to be done next year, not 10 months from now.
The rule applies to all your goals. If you want to save 30% of your salary, you may have to eliminate credit card purchases, for example. The tip here is to set goals with deadlines that can be met.
If in the first three months you are unable to save because you are putting your finances in order, create the goal of starting to save in the fourth month. When goals are not realistic, the chances of not being disciplined are much greater.
4. Learn to say no to yourself
One of the biggest enemies of the financial organization is impulse buying. This can be a difficult habit to give up, mainly because there is a certain relationship between shopping and happiness.
But if you look honestly at the last few times you acted impulsively, there is a high probability that you will have had some regrets most of the time. To avoid this discontent, before you go shopping, analyze whether the item is a wish or a need.
We are not saying that a person cannot fulfill his desires. In reality, the financial organization is not about keeping a person in the budget, but giving them the freedom to allow themselves moments of pleasure.
When finances are up to date, the budget itself may have space for various purchases (including impulse purchases).
How about creating a habit of controlling finances?
Taking control of your money means investing in you. And that, as we show in this article, requires that some actions be taken.
Follow these 4 steps – know your spending, create a budget, set goals and learn to say no. We are sure that with these first steps you will follow the path of financial success.
Finally, a very common habit for those who already have control over their finances is to make investments. Want to learn how to invest better? Then click here!