The final quarter for 2018 is drawing near and so now would be a good time to evaluate your finances. Financial wellbeing is a lot like good health. When you have vibrant health, you have the physical and mental capacity you need to live your life to the fullest. In the same way, when you are financially stable, you have the resources you have better quality of life and the freedom to live life in your own terms.
No one is ever too young or too old to start working on their finances. If you are feeling motivated, here are 5 things you can do to become better at managing your personal wealth.
Change Your Perspective
Being financially healthy isn’t just about saving or earning enough money to buy that new signature bag you’ve been lusting after for months. A lot of it has to do with your attitude towards money. In other words, how you view money and what your definition of financial wellbeing will affect all areas of your financial health. It might be a good idea to spend time evaluating what financial success really means to you if you haven’t done it already.
One simple exercise would be to take a sheet of paper and list down the problematic views you have about spending that you want to change. In another column, right down what steps you can take to change those views. In another sheet of paper, write down your priorities and evaluate how far along you are in fulfilling those priorities. The goal is to identify what attitudes you can improve and what needs to be eliminated.
Be Strategic With Your Buying Habits
Today’s world is becoming increasingly consumeristic. When you browse through social media, you’ll be bombarded by subtle and not-so-subtle advertisements that will pressure you to buy more, more, more. If you want to improve your financial status and have better peace of mind then you will have to strive hard to become a conscious buyer and not succumb into this materialistic mentality. One way to do this would be to have a solid financial plan in place so you’ll know how much you actually earn and how much you spend. However, a financial plan isn’t just enough, you’ll also need to be strategic with how you can follow the plan.
One strategy would be to avoid the mall and shopping websites unless you really have something to buy. Shopping centers and websites are designed to lure potential customers and spend their money so if you have trouble resisting the urge to shop then it’s best that you avoid window shopping. Lastly, if you go shopping make sure you make a shopping list and stick to it. Avoid lingering in areas that don’t sell the stuff you are looking for so you don’t end up buying things you don’t need.
Set Small but Achievable Goals
It is necessary to set big financial goals but it is also very important to set smaller objectives that you can more easily achieve. The big goals can sometimes feel overwhelming so having smaller objectives can help keep you motivated and focused. These smaller goals could also serve as stepping stones to help you unlock your bigger goals. For instance, if your major financial goal is to retire comfortably and have enough money to travel the world by the time you hit 60, then you can break down this plan into smaller steps such as starting a retirement fund and saving 20% of your salary every month for the next 30 years.
Remember to keep your small goals specific so they are easier to track and measure. Also, make sure they are realistic for you and your current financial state.
Invest Your Money
Setting up a savings account isn’t just the only way to secure a healthy financial future. Another effective strategy would be to invest your money into something productive. The downside of just putting your money into a bank account is that it might not be able to keep up with inflation. Unlike a savings account, investing has a bigger chance of giving you higher returns.
There are plenty of possible ways that you can invest your money. You can put it in stocks or if you are feeling adventurous you could help fund a startup business like one that sells ultra clean shampoo, just in time for the cannabis boom in the United States. To pick the right investment, you will have to examine what your risk tolerance is and how much money you are also willing to invest.
If you decide to invest in a business, make sure you read the news and current events so you’ll have a good idea of the present business climate and what industries are worth venturing into.
Identify Recurring Expenses You Don’t Need
You could save a significant amount of money by eliminating unnecessary expenses. Sometimes these don’t come in big chunks off of your paycheck. In some cases they can just be small yet frequently recurring expenses like that artisanal coffee you drink every morning or services included in your gym membership that you don’t really use. Here’s a simple yet effective exercise you can do:
- Evaluate the previous month’s spending by checking your credit card bill or make a list of the expenses you recently made. Identify which of these are recurring expenses.
- In a second column, write down whether you should keep, eliminate or swap these expenses. Your list might turn up things like cable subscription, your phone’s mobile data plan, snacks and groceries.
- Make sure the expenses you decide to keep are really important and eliminate the ones that you don’t really use.
- Last but not the least, for items that you marked as “swap,” try to find alternative products or services that are cheaper but will give you similar value.
Remember that it is never too late to find ways to improve your financial health. By making just the right changes you can significantly alter your financial outlook and start building the life that you want.