When we think of our financial goals, quite often we want immediate results. More money in our bank account on the count of 1, 2, 3... But sometimes short term financial goals or habits can be hard to sustain due to the unpredictable nature of life.
How can you solve this dilemma, to maintain a healthy financial situationwith habits that serve long term financial gain? We’ve come up with a few different methods, as inspired by ideas listed on Inc and Forbes.
All of us have luxuries. Some luxuries are expensive, but our everyday comforts also fall into this category even if they don’t come with a heavy price tag. For this habit, at the start of every week think of something you can give up.
Maybe it is your daily coffee or wine with dinner. You could switch from driving to work to public transport. When you’re at the supermarket, skip purchasing your weekly magazine or go without buying ice cream for dessert.
You can choose to change this on a weekly basis and give up just one thing from your life or if you find you don’t miss your luxury, add to the list each week. The compounding effect of going with less will save you more money in the long run.
Saving doesn’t come naturally to us all. I know that I find it a hard habit to develop, and also that I make excuses to dip into savings accounts when I do create them. If you’re finding it hard to save, create a hard-to-access savings account that is easy to put small amounts of money into, but difficult to make withdrawals.
Start small, put in little amounts that are manageable. Make it a habit that at the start of every week, you will deposit some money into this bank account. Slowly but surely, the numbers will add up. This can be seen as more of a fun weekly ritual than a savings plan to help ease the pressure of “saving” which can feel daunting.
This is similar to the first idea, but focus on your monthly budget – expenses you know you will need to spend – what areas can you reduce? For example, if you have $300 allocated to entertainment or social spending per month, can you reduce this back to $150?
Choose to tackle items on your budget one at a time and switch around where you are minimising costs on a weekly or monthly basis. Once you know you can reduce that area of your budget, you can stop switching and add more to the list over time until you start to see changes in how you spend money and your savings will grow.
A prevalent behaviour towards spending and saving, is the following: once I have paid all of my bills, and bought the things I want, I will save the remainder. When operating under this form of thinking, what happens time and time again? No money left to save.
Think of your savings as a bill you have to pay each week, or month. Set it up as an automatic payment from your bank account straight after you get paid from work and that way you’ll never be able to miss the money you didn’t know you had. As said on Forbes, “to build wealth, a change in mindset is required. Take a cut of your paycheck and put it toward your biggest financial goals.”
It is a far more stable and reliable way to ensure you are saving money. Plus you’ll surprise yourself by how you are able to get by with less when it is all that is available to you from the start. “We really can’t underestimate the power of starting small, because most of the time, that momentum builds and once we see progress, we tend to repeat behaviours.”
Set up certain rules and strategies for yourself to encourage better saving habits. If you make these decisions and decide not to break them, they can help you to save money over time as your buying behaviour and spending strategies will change. These financial rules can be thought of the same way as setting a goal to go to the gym 4 times a week, or to read at least one book a week.
When you think or create a financial rule, word it to yourself in a positive way. Instead of saying, “I can’t eat out more than twice a week”, you could say, “Every week I will treat myself to eating out twice a week”. Reframe your rules to make them sound like it is exciting and positive, even if you are limiting some aspects of your lifestyle in order to save money.
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