Regardless of whether you are making minimum wage, six figures or somewhere in between, having good spending habits could significantly and positively affect your financial future. Here are three tips to help you develop good spending habits — no matter where you are financially.
1. Budgeting is your best friend.
To budget effectively, you have to know how much money is coming in. You also have to know how much is going out for basic needs like groceries, rent or mortgage payments, insurance payments, tuition, utility, phone bills and more.
Once your basic needs are taken care of, set aside a regular amount from each paycheck that goes directly into your savings, and another that goes towards general, fun expenditures such as going out to dinner or seeing a movie. Any leftover cash should also be deposited into savings.
Organizing your incoming paychecks around your estimated cost of living is essential to building your savings. Apps like Mint allow you to sync multiple bank accounts to one profile. You can also set budgets for your long and short-term financial goals, with updates and reminders that help you keep track of your expenses from wherever you are.
2. Resolve debt quickly.
Got an unexpected bonus? Instead of blowing it on a trip or a new TV, pay a lump sum towards any outstanding debt you have. The longer you are in debt, the more money you will lose in the long run since debt continuously accrues interest over time. If you are already budgeting effectively and making regular payments on the debt you have, a lump sum payment can wipe out what you owe and leave more money for your savings.
3. Stick to the obvious.
There are many easy money management tips and tricks to follow. Here a few common sense ideas to help you better manage your money.
- Do not spend more money than you earn.
- Do not buy things you do not need.
- Pay off credit cards in full every month to avoid accruing interest.
- Invest your savings.
- Cook at home instead of eating out.
- Shop sales and in secondhand stores rather than looking for full-price, brand name clothing.
- If you can do it or fix it yourself, do not pay someone else to do it
Most of us know all of these things, but it is easy to get off track. Managing your money successfully largely relies on control. You know how to make good decisions. Stick to them.