Now I don’t know about you. But when it comes to starting a better financial journey, there are literally hundreds of options out there. And while it can be incredibly daunting to start (believe me, we’ve all been in that position). The habits you start today will help you have a better relationship with money. And while financial habits might sound boring or complicated, they really aren’t! So here are the five financial habits you need to start today for a better relationship with money.
START A BUDGET
Honestly, if you don’t have a budget. Then stop what you’re doing right now and create one. It could be a budget planner, it could be an excel spreadsheet or it could be an app. It doesn’t matter how you create one. Just that you create one. If you’re not sure where to start. Then this post on how I created mine might help.
A budget can be as simple or as complicated as you want it to be. But a good place to start is working out exactly what your incomings and outgoings are for each month. This is a great way to plug any leaks. Maybe it’s an expensive gym membership. Maybe it’s shopping around for a better energy deal. Or maybe it’s a subscription that you forgot you had. Whatever it is, plugging the leak and canceling the subscription or membership. Or shopping around for a better deal will save you money. This leads me to the next point.
SET UP A SAVINGS ACCOUNT
Once you’ve got your budget in place. It’s a good idea to set up a savings account or emergency fund if you don’t already have either. Now, trust me I get it. Saving can seem impossible if you prefer to spend your money. And I’m naturally a big spender! But here are my tips to help you save if you’re not a natural saver.
When you’re opening up your savings accounts. It’s good to think of both your short-term and long-term saving goals. And then ensure that both objectives are part of your budget.
I find moving money out of my current account on the day of payday into my savings accounts, really helps me to stay on track with my saving goals.
PAY OFF DEBT
So now that you’ve got your budget and savings sorted. It’s time to address the elephant in the room. And that’s debt. Now for the majority of us will encounter debt at some point in our lives. it just depends on whether debt becomes a problem or something you can manage. For me debt became a big problem.
And if it’s a problem for you, then just know that you can get out and stay out of debt. It can be scary and overwhelming thinking you’ll never break the cycle of debt. But believe me, you can. At one point I was almost £20,000 in debt. Five years later, I’d not only managed to pay it all off but I’d also saved for a house deposit. It really wasn’t easy. You just need an action plan that is realistic and one that you can stick to. If you want to find out more, here is how I got out of debt and stayed debt-free.
THINK ABOUT INVESTING
I think one of the biggest problems I have with the education system. Is that you’re brought up to believe that if you work hard, enter high-education and get a ‘good job’ you’ll be financially rewarded. And you might be. But that’s not always the case. A better way to be financially rewarded is to have multiple income streams. Which is where investing comes in.
The majority of us will travel through life moving from one salaried job to another. There could be pay rises along the way. But we’re usually capped within the industry we work in when it comes to earning potential. Which is why investing makes sense.
Because you can take your earned salaried income and use it to invest to create an additional income stream. Now this is part of a long-term financial strategy. As the rewards won’t happen overnight. But there are lots of investing options that will offer you an additional income stream over a set period of time. Just do your research and invest in what makes sense to you.
REVIEW YOUR FINANCES
You’ve put the time in to create a budget, set up saving accounts, made a plan to clear debt and thought about investing. There’s no point doing any of this, if you’re never going to check it or review it throughout the year. You really need to commit to setting some time aside to review your finances, once or twice a year.
Not only does it help to check that the plans you put in place are realistic. But it also helps you stay on track with your financial goals if you can see how your hard work is paying off.
So these were the five financial habits you need to start today for a better relationship with money. If you get these in order, then not only will you have a better relationship with your money. But your finances will have never looked better! Let me know in the comments below what financial habits you’re looking to start today. And any others you think I’ve missed.