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If you’ve ever been in debt or feel like you’re living paycheck to paycheck, it’s likely that your behavior had something to do with it.
Behavior with money is directly tied to how we see our world. And while many of us want to believe that we have got everything under control and our finances are just as normal as the next guy’s, the truth is, many of us have no idea how to get out of our rut.
As Dave Ramsey points out, you’re the reason you’re here, but you’re also the solution.
With some simple changes and tweaks, you CAN conquer your finances and change the trajectory of your money story.
But first, your habits need a little freshening up.
Here are 5 habit changes that will help you do better with your money
1- The Habit of Sticking to a budget
I bet you’ve heard of this before. Having a budget in place will help you manage your spending and recognize when you’re overspending.
Your budget is not there to tell you no to the things you want. It’s your list of priorities to help you say yes to the things you value and say no to things you don’t.
Budgeting is key in getting in control of your money. The wealthiest people in the world know their spending limits to ensure they stick to them. It’s time we also take our financial wealth seriously and treat our money with more care by directing it to the things that matter.
Before having a budget, my family and I lived paycheck to paycheck. We struggled to afford the things we wanted, unless we used credit cards, so we inevitably found ourselves in a lot of debt. Over six figures of debt.
It wasn’t until we implemented a budget that worked for us that we finally started to see how powerful this tool can be. It helped us pay off all our debt, become debt free, own two newer cars, have a nice house, put our kids through school and too many other things to count.
Truly, a budget is the one tool that can transform your spending and your savings in just one month.
2- The Habit of Checking in every day
Because setting up a budget is only the first step in achieving financial freedom, you must check in on your money every day.
Checking your bank and credit card accounts daily will do two things. You’re new habit of being familiar with your balances will help you spend less. You’ll be more aware of your spending rate and can stop unnecessary spending easier.
The more you keep track of your spending, the less you’ll spend.
You know the saying, “Out of sight, out of mind”? Well, we want to flip this saying on its head. Insight creates peace of mind.
3- Saving Wherever You Can
Saving on your expenses will transform your budget. Spending and saving need to be in harmony for your finances to be in good health. So, if you have a budget and stick to it by checking in daily, naturally the next step would be to start reducing your costs.
Reducing your costs on your everyday spending will help you save money for the things that matter in your life, like that vacation you’ve dreamed of or the down payment on that house you’ve been eyeing on Redfin secretly (I see you, haha. Only because it’s also me, ha!).
Review your spending and decide what areas of your budget you can reasonably reduce, even by just 25% at first.
The budget categories that helped me save were groceries, memberships, entertainment, car and home insurance, cell phone provider, and cutting our cable.
Your categories may be different. But, it’s important to review all or your spending and payments and see where you can reduce your cost.
It goes without saying that the more you reduce, the more you can save for the things that matter.
4- The Habit of Planning Ahead
Everything successful usually starts with a plan. To improve you financial status, planning ahead will serve you well.
Plan out your week by choosing which meals to make, your shopping list, and even your takeout meals. Having a plan in place will help you keep your spending on track throughout the month.
For bigger purchases, plan ahead by setting up sinking funds. It helps you save regularly and eliminates the need to purchase the item with credit.
What’s a “sinking” fund?
A sinking fund is basically a savings account that you “sink” money into per month to be used for a specific purpose you choose.
Sinking funds can be used for anything. Starting in January, I’m creating a new set of sinking funds. I’m including a new car fund for me, since I’ll likely need to replace my 12 year old car in a few years.
5- Making Your Own Meals
Meals at home cost a fraction of what you’d pay for the same meal out. You see, when you eat out, you’re paying for more than just a plate of food. You’re essentially paying for the ambiance, the service, the clean up, and the markup of the plate itself.
Creating a habit of cooking at home, even extravagant and high end dishes, will save a lot of money and feed more people.
How We Celebrating Occasions At Home
About 8 years ago, my husband and I decided that we’d dine in for special occasions. Every year, we decide what restaurant-style dish we feel like having and using Pinterest as my helper, I recreate it.
We get to spend time together, often in our pj’s, uninterrupted by wait staff, and without the hassle of waiting for a table. We also don’t need to spend equal to a week’s worth of groceries on that one meal.
Over the years, we’ve been able to save thousands of dollars using this trick. And, we’ve been eating delicious food at a fraction of the cost ever since.
This goes for work breakfasts and lunches. Make your coffee at home and bring your breakfast and lunch with you to work. You’ll easily save $10-$20 per day with this small habit change alone. That’s about $200-$400 per month.
Imagine how much money your new habits could save you in the long run.
We all want to be better with our money. The better we are at how we spend and save, the more we can afford the things that matter the most to us.
The way you spend your money says a lot about your priorities. So, take the time to foster good money habits so you can be on the right side of your money. It will empower you to live the life you’ve always wanted.