If you want to build wealth, then you’re going to need to start sooner rather than later. Whatever your reasons may be, maybe you never want to have to say that you're ‘broke’ again, or maybe you just want to live a comfortable life and provide the same for your family. The following personal finance habits will help to set you up for success.
Take a look and see what you can change for better all round finances and a more comfortable lifestyle:
Have Multiple Savings Accounts
If you don’t have a savings account, then you’re missing a trick. You’re going to need to open at least two savings accounts right away to get into good habits. This can sound scary, but once you’re into the habit of doing it, you’ll love seeing the money build up in these accounts. One savings account should be like a ‘cash cushion’ just incase something unexpected should happen. Another should be savings for things like trips, birthdays, vacations, and Christmas. When you have money ready for these things, you won’t have to worry closer to the time when you realize you haven’t saved a penny! Failure to save will only mean having to borrow money from a place like Money Boat UK. While this is fine for emergencies, you can get into real financial trouble if you start taking out payday loans for normal expenses. You won’t have to worry about borrowing money at all if you’re smart.
Many say follow the rule of saving 10% of your paycheck, but even smarter people say you should automatically save 20%. You should save as much as you can afford!
Invest Your Spare Change
Investing is something that the smartest, wealthiest people do to build up their finances in the long run. However, many put it off for years because it sounds complicated and they don’t have mass amounts of money to invest. Good news: you don’t need thousands to invest, and you definitely don’t need to know too much about what you’re doing. Apps and systems are making investing more accessible to those who want to try it out. Micro investing apps are available for anybody to use. These apps round up purchases made by you, and then put them into investments that can add up in the long term. You should start sooner rather than later if you want to make the most of compound interest.
Stop The Small Unnecessary Purchases
Take a look at your budget and bank statements and see if you’re making any unnecessary purchases that you could cut back on. These purchases may seem like nothing when you make them, but you need to be wise. Over time, they can seriously add up. For instance,a £5 daily coffee from Costa or Starbucks amounts to about £35 a week, or £150 a month. That’s a huge some of money! Plus, if you invested it and earned 10% annual return on it, you’d have £948,611 in 40 years. Do you want the coffee or that nice sum of money sat in your bank account?
Write Down Specific Money Goals
The reason people don’t seem to be able to have a lot of money is usually simple. It can be down to the fact that they simply haven’t thought up any specific money goals! Think about what yours are and write them down. Don’t be afraid to dream big and be ambitious. For example, what would you like to be earning weekly/yearly? What would you like your net worth to be? How much would you like to have saved/invested? Making these goals clear in your own mind and setting the intention is sometimes enough to start working towards them. If you don’t, then you never will!
Read For Pleasure
You’ll usually notice that all of the wealthiest people read for pleasure. Sure, you can read story books, but don’t forget to pick up personal finance books and self development books in general. There are so many books out there that could have a huge impact on your money mindset, by the likes of Tony Robbins, Tim Ferriss, and other people who have done amazing things and made mass amounts of money from following their own advice. Start reading these books and applying the principles and you should see a huge difference in your daily life.
Track Your Spending
If you don’t currently track your spending, you need to start. You won’t be able to create and stick to a budget without tracking your spending in the first place. Apps can help you, but it could be as simple as noting it down in the notes section of your smartphone. Write down everything, even small purchases. You may soon see patterns. Where does all of your money go? Where can you cut back? Are you spending less than you earn? This is a great way to get your spending under control.
Surround Yourself With People You Admire
The people we spend time with are the people we become most like. If you’re spending time with people who waste their money and complain about not having enough of it, who do you think you’re going to turn into? Energy rubs off on people, so if you’re not careful, this could be you! Try to find mentors, coaches, and people who have done what you want to do. Find people with the right attitude and mindset. They don’t have to be millionaires; just people who have a good relationship with money. The more time you spend with these kinds of people, the better you will find your own relationship with money improves.
Change The Way You Think
You may have realised this by now, but you need to change the way you think if you’re going to build personal finance habits that will set you up for success. Having a great ‘money mindset’ is a must. If other people can have all of the money they want, then why can’t you? Change your limiting beliefs and you can change your financial situation!