Fancy that gorgeous Burberry bag? Swipe off a credit card and it’s yours … but so is the debt that comes with it. By using your credit card, your bank is paying for the bag, while you are going into debt. Let’s learn how to save and spend more shrewdly, shall we? Building good money habits can be difficult but once developed can help you achieve your financial goals.
5 Money Habits to Start Developing Now
1. Save More Money Than You Spend
Saving more money now will help later, when you hit a ditch in your life or when you retire. Instead of spending, paying bills and saving what’s left, start doing the opposite: save for your financial goals first, pay the bills and then spend the rest.
2. Think about Retirement
If you start saving at age 40, you’ll need to save twice as much money monthly as if you had started at 30. The later you start, the more you’ll have to save to reach the same goal. Compare this to the sooner you save, the more time compound effect has to work, and the more interest will grow.
3. Get Rid of Credit Card Debt
Debt stops you from financial progress. Have a timed plan, say 24 months, to get out. Also consider having an emergency fund: instead of paying £500 into credit card debt, pay £250 and save the rest for emergencies.
It may take longer, but you’ll be covered should something unexpected happen – and trust us, something usually does! When you are finally out of debt, if you must, keep only one credit card and use it only when necessary.
4. Invest and Diversify
If you have some extra money, invest some of it in stocks and bonds. Start small and see how it goes; don’t put all of it on one single investment. Diversify your investment, which means spreading your eggs in different baskets.
5. Get Rid of Subscriptions You Don’t Need
If your busy life means you don’t have time to watch TV, then you don’t need a cable subscription! Simply go to Netflix and download shows when you want to. You don’t need to subscribe to Italian Vogue magazine; you can just visit their website for the same information. Don’t waste your money on things you don’t need or use.
6. One Extra Money Habit to Develop
Is there something you love doing, like arranging flowers, designing dresses, or writing? Consider taking up a part-time job at a flower shop, or a designer boutique, or an online newspaper. It’ll still be your hobby, but you’ll get paid for it.
Which of these money habits do you intend to develop first? Is there something you’d like to add? Please leave a comment below. We’d love to hear from you!