It’s the first week of the new year and you’re are still on a high, feeling extremely motivated to make 2019 your best year ever. But as you promise to keep your weight in check and lead a healthier life, why not throw this in: Keep your finances in order. Finally build the habits that guarantee a better future well beyond 2019.
Despite its importance, finance does not grab too many regular folk. Most can go through their entire lives working and earning without giving finance any serious thought—but spend enough days ruing how they can’t get out of the financial rut they’re in.
While we don’t expect everyone to become financial gurus, we believe there is much to gain if everyone just learned a few basic financial principles.
Earmark Your Savings
How many times have you tried to save up for something but had your plans altered because you impulsively bought something else, which you ended up barely using anyway? Money is extremely hard to keep when you know it’s just an ATM away. It doesn’t help that our power to convince ourselves that we really need something is overwhelming. So, it’s time for drastic action to keep from giving in to the temptation to spend.
One effective way is to earmark your savings by placing it in a separate fund or account that is not going to be too accessible. Open a passbook account, and designate it for a particular dream—like buying a house or setting up your child’s college fund. This way, it becomes extremely obvious to you that you are affecting your big dream every time you withdraw from that fund.
That’s right, setting up physical and emotional roadblocks to safeguard a specific fund is a very effective way to avoid impulse spending.
If you’re the type of person that just has too many things going on in your life, you’ll probably say that squeezing in a few minutes every day to keep track of your expenses is impossible. All right, if you say so. Then, do this: Check out the many financial and budgeting apps available out there. While there are tons to choose from, the main feature of many of them is that they’re able to link all your accounts! This means they automatically keep track of your expenses, set budgets, and even send you alerts when you’re about to overspend. Of course, having the technology to keep track of your finances is one thing, having the discipline to follow it is another.
Set a Budget
This may seem overly simplistic, but many people really do not know how to make a budget—or just do not invest in the time to make one. To define it simply, a budget is a limit, or estimate of a limit, of your income and expense over a given period of time. Making a budget gives you a baseline of what you’re allowed to spend. This way, you still have enough funds to allocate for savings and other important concerns. Without a working budget, there is simply no way of knowing if you’re already spending beyond your means—until it’s too late.