Good spending habits are an important part of our lives and, like any habit, we can learn by practicing controlling our spending habits. Below are 8 money tips we must live by in order to take control of our spending habits:
1. Pay attention to the interest rate
When you have loans, try to pay off the one with the highest interest rate. For savings, look for the one with the best or highest interest rate. Always check your interest rates for both savings and debt – the compound interest rate can be your best friend (savings) and your enemy (debt). Check out this formula to find compound interest for savings.
2. Have a budget
Net income is what you budget! It’s not the money you expect somewhere! Not the money that so-and-so promised you! And definitely not your credit card! You don’t budget on gross income, therefore, the money your employer or company contributes before all your deductions, such as taxes, retirement contributions.
Use the 50/20/30 rule for setting your budget: divide your net income by three; 50% goes to housing, transportation, utility bills and groceries, these are known as essential expenses; 20% goes toward your debt payments, savings contributions, investments, and retirement contributions (some employers deduct these contributions from their employees’ gross wages). These are called Financial Priorities, and lastly, 30% of your net income must go towards your Lifestyle Choices. These include personal care, restaurant, internet, entertainment, gym memberships, shopping, and other miscellaneous and discretionary expenses.
3. Treat your money as part of you: set specific financial goals
“I want to pay off my credit card loans this year.” This statement is simply mute; it doesn’t push you to do anything. Now let’s look at this statement: “By the end of July of this year, I want to pay off $250 on my ZXY bank credit card, and by September of this year, I want to pay off $100 on my Shop-by-Choix clothing credit card.” The second statement is clear and forces you to do something. You can divide the $250 by the months until July and establish how much you will have to pay monthly to reach your goal, the same goes for the $100 debt.
4. Love yourself and be grateful
Appreciate the things you have first and don’t set your life based on others, not even your friend, because we all walk different financial paths. Acquiring more materials will NOT make you happy: the more you get, the more you want.
5. Avoid co-signing a loan
If the bank asks the borrower to have a cosigner, it means the bank doesn’t trust the borrower to make payments, and neither should you. Co-signing your friends or family can hurt your credit score if you don’t pay your dues and the bank can come after you.
6. Reconsider what your money can do for you – Invest in the stock market
One of the reasons people don’t invest is because they think they can’t afford to invest in stocks with little money and that it’s a waste of time, but when you start with what little you have, you actually get a lot of money. step towards building your wealth. Almost everyone has the luxury of starting to invest in stocks when they learn to be disciplined with their money. The risk of not investing now is wasted time and wasted time means wasted wealth growth!
7. Your increased income must support your savings and investments
Getting a raise doesn’t mean more automation of your spending habit; Instead of spending more, use your raise to increase your investments and savings.
8. Request your reward card from the local supermarket
If your local supermarket offers a loyalty program, sign up, as this can help you save on groceries through the rewards they offer for your purchase or even shop at a cheaper price than the shopper without a card. Just make sure the prices the products sell for are the same or lower than other local stores; otherwise the loyalty card won’t be worth it – the goal is to make the card work for you.
