How To Develop Better Money Management Habits

by on August 23, 2019

We live in uncertain economic times, far removed from the halcyon days so enjoyed by the boomer generation. The global population keeps rising, humanity faces numerous challenges, and entire industries are besieged by the march of technology (even as it brings fresh industries into existence). What’s more, the gig economy — while good for some — is worrying for others. You never know when your situation might turn sour.

The key, then, is to make the most of the money you can make: minimizing what you spend (tricky given how good stores are at convincing you to buy), maximizing what you save, and using every (legal) trick in the book to get ahead of the game. To help you out, here are some core tips for improving your money management:

Look ahead before every purchase

It’s extremely easy to get used to spending money and using short-term thinking. You want to buy something, and you have the money saved up, so you might as well go for it — treat yourself, live a little. Of course, the problem there is that your short-term decisions add up to serious long-term consequences.

For a start, then, stop to think before you buy something. Does it fit into your long-term financial plans? Can you continue to spend that way and still reach your goals? If not, then don’t make an exception this time, because you’ll inevitably make the same “exception” every subsequent time. Draw a line in the sand and stop making excuses. The savings will add up.

Adapt your hobbies to keep costs down

We all spend money on entertainment. While it’s technically possible to be content without doing so, it’s not very practical for most people, so they pay for Netflix, go drinking, gamble, indulge in retail therapy, take extravagant courses, and do other things simply because they want to. And why not? Living like a monk might be appealing for some, but it isn’t tremendously exciting.

You don’t want to give up your hobbies, of course — so why not adapt them? Minor changes can make them much friendlier to your wallet. For instance, you could start drinking at bars that aren’t as costly, and keep gambling but play online to eliminate travel costs. You can continue to enjoy life, but with a much smaller price tag attached.

Use an account that helps you save

Taking steps to save money isn’t the ideal arrangement, because people are fallible, and you’re going to slip up. You’re also going to find it stressful trying to set aside money, because you’ll want to spend it. A useful tactic, then, is to keep your money in an account that actively helps you save. For example, you could have your bank round up every transaction and put the extra money in a savings area — it won’t seem like much, but it’ll add up.

You can also use a banking service that tracks your spending and lets you know how it breaks down. You might be surprised to discover where your money is going, because you don’t tend to think of small payments as threatening — and with clear analytics telling you that a particular store is accounting for 30% of your salary, you can build up enough motivation to change.

Read financial terms very carefully

When you create a user account for an online service, do you read the terms and conditions? Most people don’t, and the same goes for payments we make (particularly subscriptions). You can think you’re getting a service for just one month, only to discover years later that you accidentally signed up for a recurring monthly subscription.

So the next time you need to pay for something (or receive a bill for something), read the conditions very carefully. Not only will you be able to avoid paying for unwanted things, but you’ll develop more drive to look for alternatives — e.g. different grocery stores, or different SaaS providers. And the more you know about money, the better your position will be.

Money management, like many things, is all about changing your default behavioral patterns. It may be tough to make the initial changes (and stick with them for a while), but sooner or later they’ll start to feel automatic, and then things will be relatively smooth.

{ 0 comments… add one now }

Leave a Comment

CommentLuv badge
This blog uses premium CommentLuv which allows you to put your keywords with your name if you have had 3 approved comments. Use your real name and then @ your keywords (maximum of 3)

Previous post:

Next post: