The Top 5 Healthy Financial Habits You Shouldn’t Ignore
HEALTHY FINANCIAL HABITS YOU SHOULDN’T IGNORE
Has your life been turned upside down during the COVID-19 pandemic? Or, has this helped you focus more on getting your finances in order to make more money or to budget better? Whatever the reason or answer it’s important to adopt these top healthy financial habits that you can’t ignore.
1. PAY YOURSELF FIRST
Before you pay any bills, get in to the habit of paying yourself first. That means by saving and investing a percentage of your earnings before you do anything else with it. Save at least 10% of everything you earn first. This doesn’t mean you spend this on the latest trend you’ve seen that’s tickled your fancy! Put this money into your savings or investment plan.
Saving something is better than nothing. The important thing is you are developing a good habit and making that hard-earned cash work for you, as opposed to someone else. Once you’ve paid yourself then you can pay your bills and purchase the things YOU REALLY NEED!
2. SPENDING LESS THAN YOU EARN
Don’t live beyond your means, if you’re spending more than you earn, your debt will be building up more and more. Most cases people turn to the credit card and not paying off the balance each month leaving you to pay extortionate fee and interest rates than can take years to pay off. Do you really want that around your neck? Make a yearly or 5 year goal to pay of your debt and stick to it.
3. EMOTIONS SHOULD NOT AFFECT YOUR MONEY HABITs
We can easily fall into the trap of spending money when we’re feeling disappointed, sad, angry or even happy. These aren’t helpful when it comes to make financial decisions. Develop a habit of taking your time and use your head before you make any financial decisions. For big purchases ask family and friends on their opinion before you part with your cash.
For example: my 24 year old son wanted a brand new car and wanted it on finance. He came to us to see what we thought. Firstly, the finance was over 5 years and it was a large amount a month considering his wages were quite low. Second, the insurance would be a lot higher, so this was another expense. Thirdly, repairs and maintenance of the car would be on top of everything he’d be paying out each month.
We gave him all of these things to consider and in the end he got a second hand car on finance but over 2 years and the monthly payments were half the amount he’d be paying if he’d got the new one and with saving each month as mentioned in the first paragraph he managed to pay the whole thing off in a year. He said he didn’t want any debt as he was applying for a mortgage.
4. CONTROL YOUR DEBT
Having debt is not always a bad thing. Buying a home with a mortgage is an investment and it’s better than paying rent. Borrowing money to enhance your education can allow you to get a better paid job. You might get a loan to set up a business. It can also improve your credit score.
On the downside using credit cards to cover extra spending is considered a bad use of debt as the repayment terms can be expensive if not paid back on time.
5. SPEAK TO A FINANCIAL ADVISER
If you need help managing your money or if you’re in debt and don’t know where to turn speak to a financial adviser. They provide a wealth of knowledge and experience and they will help you draw up a plan to fulfill your objectives.
FINANCIAL TIPS
Set realistic goals that are achievable.
Think before you spend (do you really need it!)
Use rewards as a motivator (within reason) to treat yourself once you’ve met your goals.