11 November 2019

Five money habits everyone should learn

Most of us would like to not think much about money and instead put our efforts into things that bring us more joy. To be able to not worry about money, you’ll need to learn some good money habits to get your finances in good, healthy order. If you can do that, you can let your money look after itself, and get on with more important things. 
                                                             Image by Charles Thompson from Pixabay

Plan And Budget
To achieve any kind of financial goal, you need a clear plan to get there, and a budget to help you on your way. Create a financial plan that includes short and long term goals, and goals for different kinds of purchases. For example, you could aim to save for a deposit for a house as a long-term, serious goal, but a short-term goal to save for a new dress for the office Christmas party. I am currently doing BOTH of these!

Your budget covers the money you spend day to day, and how that spending fits your larger goals. Set a budget to help you decide what you’re spending day to day, and use it to track, review and adjust your spending. I set up a spreadsheet to show what was coming in and going out and then set myself a weekly budget! Take cash out as it's harder to spend when you can see the money leaving your own hands rather than your contactless card!


Be Smart With Credit
Credit and debt are often seen as bad financial habits, but actually, they can be used very wisely to boost your finances. Good debt, which includes things like mortgages, are very common and don’t need to be steered away from. You do need to be savvy about credit, though, especially high-interest credit like a credit card. If you fail to pay this off, this can really impact your credit score and getting out of debt with bad credit can be challenging. If you have debt, pay off the highest interest first, and avoid using credit for day to day expenses. A good way to boost your credit score and show you are good with credit is to use your card for small purchases and to pay the balance off every month.


Find Additional Sources Of Income
A great money habit is to find an additional source of income, instead of just relying on one way to earn money. This protects you from financial disaster if your main income stream is stopped for whatever reason and helps you to bolster your savings. Think about taking on something new like an e-commerce project, renting out your spare room to a lodger, or taking on some freelance work in your spare time. If you have the means too, if not, budgeting is your best friend - you could save so much money this way.


Save A Fixed Percentage Of Your Income
Everybody knows that they should have some savings set aside, but the smartest way to boost your savings account is to get disciplined about them. Put a set amount of your income each month straight into your savings. Set up a standing order to make this happen automatically as soon as you get paid, which means the money goes into your savings without you having to think about it but make sure it's affordable for you. Only put in what you know you wont need to take out. It will get harder to keep dipping into it once it grows into a big savings pot.


Know When And Where To Ask For Advice
Never be too proud to ask for advice. Approach a tax expert, an accountant or a financial planner to help you if you have questions about anything money related, such as organising your taxes or sorting out your pension plan. If you don’t understand, invest the money in getting proper advice. Google budgets and read other peoples budgeting tips if you need some free advice - you never know what good habits you'll pick up!

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