26 Better Money Habits for Saving, Budgeting, and Increasing Your Income
We have been told since we were children that “money can’t buy you happiness.”
The fact of the matter is that this old cliche is only "mostly" true. A recent Cambridge University study shows that money can indeed buy happiness. At least up until a certain point.
The break point is when money habits are no longer a major issue
causing problems in peoples lives. Below this financial level increased
money does indeed increase happiness. Generally this number is set at
around $50,000 dollars a year, but with improved money management the
number can be lower.
When it comes to money and happiness all we need to do is ensure that money is not the everyday problem it can sometimes be for those with lower income levels.
When it comes to money and happiness all we need to do is ensure that money is not the everyday problem it can sometimes be for those with lower income levels.
This better money habits guide will show you how to treat money the right way: so that it lasts and works for you. We can't help you make more money, but if you learn how to be a better saver, your money can go a lot further than it does.
As your everyday spending habits change, so will your overall financial situation. With discipline and deliberate action, you can build a few good money habits into your day that will lead to a positive impact on your financial life.
Certain debt can be a friend, but most debt can also cause a lot of problems. Surveys show that 38.1% of American households are in credit card debt, with the median debt being 5,700 per person.
Credit card debt is specifically bad because it is not for those "big" investments like a car and home, but for stuff that could often be lived without.
As your everyday spending habits change, so will your overall financial situation. With discipline and deliberate action, you can build a few good money habits into your day that will lead to a positive impact on your financial life.
1. Minimize Credit Card Debt
Debt is not always a bad thing. Debt allows us to purchase a home while we are young enough to have years of enjoyment. Debt allows us to buy a vehicle when the up front costs might keep us from affording one for many years.Certain debt can be a friend, but most debt can also cause a lot of problems. Surveys show that 38.1% of American households are in credit card debt, with the median debt being 5,700 per person.
Credit card debt is specifically bad because it is not for those "big" investments like a car and home, but for stuff that could often be lived without.
Being
able to eliminate debt and build savings will certainly remove some
major stressors and unhappiness from your life. Therefore, the most
important money habit is to simply reduce credit card debt. By keeping
this "optional" debt as low as possible, you reduce expenses, can
increase savings and live without the constant fear of not being able to
meet lingering debt commitments
However, this is the most important financial habit to have. You must be very diligent and completely honest with yourself regarding your spending.
Each evening, record everything that you and your family purchased that day. Make sure to keep all of your receipts, credit card statements, and notes so you are able to look back on each expenditure.
After you have made this list each night, write down a description of the purchase and how much it cost. You may also want to make a note saying why the purchase was made. Did you stop to buy a bottle of water on your way home? Looking back, perhaps you could have waited 10 minutes until you got home to get some water there.
This habit needs to happen on a regular basis because it is easy to forget small purchases here and there that you make throughout the day.
After you have written down everything you have purchased that day, use a notebook or a spreadsheet program to see where you can make improvements in your spending.
You can start doing this by finding a tool that you like, such as Mint or Personal Capital, and merging all of your bank accounts into it. You should include your credit cards, your checking account, all of your investments, and your personal assets (such as your car or home).
Log into your account daily to look over your finances. This can help you make sure every recorded purchase is valid and you are not being charged for something that you did not buy.
Additionally, it will allow you to look at the overall picture of your spending habits to see if there is an area where you can reduce your spending, or even eliminate it completely.
Knowing your spending habits will allow you to know how much money you will need in an emergency fund. Do you have enough money saved to allow you to get through six months without an income?
It is important to also consider your credit card debt here so you know you are able to continue paying off any debt that you owe, even if you have a lapse in income.
When it comes to your savings, are you earning enough interest? Have you put your money in an effective place where it is able to grow and work for you? Perhaps you have some money in a very low-interest bearing savings account that can be moved to a different account where it can benefit your financial situation even more.
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2. Track Expenses
Tracking your expenses can be daunting because you have to be 100% honest with yourself every day about where your money is going.However, this is the most important financial habit to have. You must be very diligent and completely honest with yourself regarding your spending.
Each evening, record everything that you and your family purchased that day. Make sure to keep all of your receipts, credit card statements, and notes so you are able to look back on each expenditure.
After you have made this list each night, write down a description of the purchase and how much it cost. You may also want to make a note saying why the purchase was made. Did you stop to buy a bottle of water on your way home? Looking back, perhaps you could have waited 10 minutes until you got home to get some water there.
This habit needs to happen on a regular basis because it is easy to forget small purchases here and there that you make throughout the day.
After you have written down everything you have purchased that day, use a notebook or a spreadsheet program to see where you can make improvements in your spending.
3. Review Your Finances on a Regular Basis
When it comes to building better money habits, “what gets measured gets managed” is a reminder that the most effective way to control your money is to review your financial situation each day.You can start doing this by finding a tool that you like, such as Mint or Personal Capital, and merging all of your bank accounts into it. You should include your credit cards, your checking account, all of your investments, and your personal assets (such as your car or home).
Log into your account daily to look over your finances. This can help you make sure every recorded purchase is valid and you are not being charged for something that you did not buy.
Additionally, it will allow you to look at the overall picture of your spending habits to see if there is an area where you can reduce your spending, or even eliminate it completely.
Knowing your spending habits will allow you to know how much money you will need in an emergency fund. Do you have enough money saved to allow you to get through six months without an income?
It is important to also consider your credit card debt here so you know you are able to continue paying off any debt that you owe, even if you have a lapse in income.
When it comes to your savings, are you earning enough interest? Have you put your money in an effective place where it is able to grow and work for you? Perhaps you have some money in a very low-interest bearing savings account that can be moved to a different account where it can benefit your financial situation even more.
⏩Continue Reading⏭
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