It’s the biggest question on everyone’s minds these days, isn’t it? It’s been a tough couple of years from a global economic perspective. Financial struggles became a common occurrence that we’ve all dealt with in varying degrees throughout the past period.
But let’s not dwell too much on the negatives here. Instead, let us explore how we can cope with this situation and make the best out of it.
Accordingly, we thought of a few habits that can help you keep your finances in order and possibly improve them during these tough times. Read on for the details.
Pay Yourself First
What do you usually do when you receive your salary? Our guess is you’re either taking a cautious approach where you pay your critical bills such as rent, electricity…etc first. After that you probably move on to less essential purchases such as shopping, going out…etc. Whatever’s left after that (if any) would be saved.
We however, suggest taking 10% of your monthly income (or more if you can afford) and move it to your savings account. This should be the absolute first thing you do once you get paid, it should be treated with the same importance of your critical bills.
In doing so, you guarantee a monthly figure of saved money rather than waiting till the end of the month and checking if any money is left. Additionally, this will help you improve your spending habits by making less money available for non-essential spending. It would also mean that this figure keeps stacking up consistently each month.
Don’t Get Too Comfortable With Debt
It seems that credit cards have this power over us that is almost inexplicable whenever we see something we want to buy. A simple card swipe and that -usually expensive- item is suddenly yours. Not only that but it psychologically almost feels as if you’ve bought it for free. Needless to say of course, this couldn’t be further from the truth.
Accordingly, it’s quite easy to stack up such purchases and before you know it, you’re drowning in needless debt. A general rule to follow to avoid such pitfalls is, unless you can afford to pay for a certain item outright in cash, then you probably shouldn’t be buying it.
Saving vs Investing
So we’ve already discussed saving earlier which is very is very useful when it comes to controlling your spending habits and making sure you always have a spare sum of money on the side in case of an emergency. While it can certainly save you from getting in trouble it is not likely to make a big difference when it comes to significantly improving your financial situation.
This is where investing comes into play. Always explore opportunities to use up some of the saved money in investment opportunities because just keeping money in the bank is actually counterproductive on the long run due to money losing its value because of inflation. As per recent evidence, money is very likely to lose purchasing power over time.
The savings money should have a cap and any additional money beyond that cap should be directed towards an investment that may result in creating an additional stream of income for you.
Learn to find the right balance between saving and investing. Don’t depend solely on saving but also don’t spend all your saved money on investing.
Easier said than done
Changing one’s habits has never been easy, especially when it involves a certain level of discipline and there are few things in life that test our discipline the way resisting spending money on things we would like to have does.
That’s why its always important to keep track of why you are changing your habits and the positive impact it will have on your life. Always look at the big picture and understand the reasons behind your decisions and that should make it a bit easier.
Key Words: Global Economy, Finance, Financial struggles, Spending Habits, Saving, Investing