Building good Financial habits is crucial for lasting financial success. Discover practical tips and effective strategies to manage your finances wisely and create a secure financial future.
When you feel the itch to swap out those familiar old habits for something fresh, these strategies might just be the key to unlocking your path to prosperity. If the constant struggle to save money has you feeling frustrated and anxious about your financial journey, perhaps it’s the perfect moment to embrace some new habits. These five could be real game-changers:
1. Pay yourself first
In an ideal world, we would have been taught the art of saving, an act of kindness towards our future selves, from a young age. Someone would have instilled in us the importance of investing during our early gigs like babysitting or paper routes.
But reality hit differently for most of us. Instead of learning to save, we became experts in bill payments. The more we earned, the more financial responsibilities we shouldered. Unfortunately, this left us with limited resources to build a robust savings account or make smart investments.
What we missed out on was the lesson of prioritizing savings and paying ourselves first. Even if you’ve been stuck in the cycle of just paying bills for years, it’s time for a budget makeover. Find a way to set aside a portion of your earnings—whether it’s for unforeseen circumstances or a specific goal like a vacation, education, or retirement.
You don’t have to make drastic changes. If the idea of saving seems daunting, start with small steps. Every bit counts, especially since the interest on your savings grows over time. Let’s say you identify $100 per month to invest in a no-minimum IRA. In 30 years, at an 8% interest rate, that $100 a month could blossom into nearly $137,000. And that’s with just $100 per month. Imagine the potential if you started investing more and allowed interest to work its magic on your earnings.
2. Dance to the Beat of Your Own Drum
Some might believe that wealth is all about living a glamorous life, starring in your own reality show, or amassing millions of followers on Instagram. However, financial planner Tom Corley discovered a different truth after five years of researching the habits of the wealthy. Surprisingly, many of them share a common trait: they live below their means.
In his book, “Rich Habits,” Corley introduces the concept of “saver-investors”—individuals with modest incomes who prioritize their finances, faithfully saving despite not indulging in the latest fashions or trendiest cars. Their focus is on financial security, not on keeping up with others for validation. You exude confidence in making sound financial choices, regardless of what the rest of the world is up to.
3. Calculate costs in terms of life
Imagine this scenario: Your friends invite you to a concert, and the ticket costs $125. You make $25 per hour, which translates to about $18 after taxes. In other words, you’d have to dedicate almost seven hours of your time working to cover the ticket expense. Before making a purchase, consider how many hours of your life you’re willing to trade for it. Calculating costs in terms of the time you invest is a quick and simple way to figure out what truly matters to you.