Building up wealth may not seem possible when struggling to stay within budget each month. That said, there are some simple things you can do to put yourself on a healthy financial track and look forward to a brighter financial future.
#1: Automate your savings
If you’re not socking away at least 10 percent of your income into a savings account, you’re missing out on a golden opportunity to build up your reserves. Get into the habit of automating your savings contributions so you don’t even have to think twice about it. Feeling ambitious? Save 15 percent and diversify your savings accounts to include high-yield investment accounts for more interest earnings.
#2: Paper, not plastic
Learning to live on cash instead of credit cards can make you more conscientious about how and where you spend your money. It’s easy to develop a blind spot to the actual cost of a purchase when you aren’t paying it for upfront. Get into the habit of living on a cash-only basis and you may be more mindful about your purchases — and avoid the stress of a high debt load altogether.
#3: Break the compulsive shopping habit
If you want a better handle on your finances, make smarter spending decisions and derail those impulse buys for good. Compulsive shopping can put a big dent in your finances and make it almost impossible to reach your savings goals each month. Recognize your triggers and work on breaking the cycle to protect those hard-earned dollars.
#4: Set realistic financial goals
Figure out what you want and go for it. Set specific savings goals for each month and hold yourself accountable by logging your contributions in a spreadsheet or using a budgeting app to track your progress. The act of setting a goal can motivate you to make the changes you need on a day-to-day basis. Talk to a financial advisor or financial planner if you need help figuring out where you stand with your current cash flow situation and what types of goals really are feasible.
#5: Think big.
Think about the bigger picture when you’re putting together a budget or setting a savings goal. Recognizing wants of the moment versus needs in the future can make it easier to manage money effectively for the long haul. Be prepared to make sacrifices in the short-term and understand the tradeoffs when making bigger purchasing decisions. It’s easier to build wealth when you accept the fact the short-term pain nets a long-term gain.
What are your favorite money management tips? Where do you trip up on your budget? We’d love to hear from you in the comments below.