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Everyone uses money in different ways, and no one really explains how to use it properly. When I was young, I was taught how to mostly save and spend on necessary things. I was never taught about investing, financial goals, assets, retirement funds, etc. I thought saving was the ONLY WAY to be “financially stable.”
I eventually changed my perspective on money as I got older. Money is a tool that we use on a daily basis. We spend, save, or invest it, but no one talks about how we can use it to set us up for financial success.
Most people grew up being ignorant about money because schools or parents don't teach them about it. This is a topic that they have to learn on their own by turning to the internet (this is how I started).
Money is so crucial in life because we need to buy our basic needs. It's amazing to see how much money is being used each day and how much debt people have as well. There are many people who are in debt because they don't know how to take control of their money.
To break these bad habits we have to learn and find a system that works for us. Starting new habits doesn't happen just overnight, but by understanding and working on it, you can change.
If you are a person who wants to get rid of your bad habits and work towards financial success then this post is for you.
Stop Shopping on Impulses
Most people are guilty of shopping on an impulse because we are bored and shopping is a big weakness to most of us. Let's be real here, the market does a great job in advertising and displaying beautiful products or services, and we end up buying everything we see, racking up more debt on our cards.
If you keep purchasing on an impulse, it starts to add up very quickly. Your budget from $100/month can be up to $500/month if you keep spending. Before you buy something, I usually ask myself a few things before buying anything:
- Do I need it? Is it worth it?
- Is the price reasonable?
- How many times will I use or wear it?
- Is there room in my room/house?
- How much did I spend already?
I usually have to ask myself these questions because I don't like to hoard things, and I don't like seeing my money leaving my bank where I feel broke.
Instead of shopping, replace it by making the products if you can or do an activity that doesn't require spending. I know most of us love to go shopping during our free time, and online shopping makes it even easier to spend a fortune because we see so many things online.
If you want to stop this bad habit, you should create a budget where there is a certain amount you can spend on shopping. The rest you should save or invest your money.
If you want to learn to become wealthy, you must learn to shop and save like a pro.
Pay Off Your Debts
Did you know if you pay off your debt fast and early you can save a lot more money? Think about how much interest you'll be paying if you don't pay in full every month?
People borrow money every day. Whether you are taking out a loan or using a credit card, there is always an interest rate we have to pay.
Dealing with debt can be extremely stressful and challenging, and the more you delay your payments, the longer it takes to pay them off. As of 2021, the United States household debt was up to $14.96 trillion. Most household debts are mortgages, students loans, and credit card debt.
Some people don't like paying it off which takes longer to pay off. By creating a plan to pay it off faster, it can be your first step to debt freedom.
The first thing you should think about is prioritizing what needs to be paid off first and spend less on unnecessary things that you don't need. Is it your student loans, mortgage, or medical expenses that need to be paid off first?
By creating a budget each month and paying off your debt, you can feel less stressed.
Invest your Money
Putting your money into a saving account and letting it sit there is not going to do you any good. You only get around .04% back by keeping it in your savings account.
When you think about why wealthy people stay rich all the time, it's because they invest in a lot of things. They either start a side hustle or business or invest in real estate. They don't just let their money sit in their bank account and watch it grow. They invest their money so it can do the work for them.
Investing your money allows it to grow quicker than putting it in your savings account. Now, don't get me wrong about a savings account. It's great to have as just in case something happens, but you shouldn't put all your money in there.
Your money will lose its value over time if you keep it in your savings account. There is always inflation every year, so invest your money today!
If you want to retire early or have extra income, the best way to do it is by investing your money. Check out Wealthfront if you are starting out and want to learn to invest.
Some things you can start to invest in are stocks, real estate, or a business. Investing takes time to see results, but if you do it long-term, there'll be a great return.
Build an Emergency Fund
An emergency fund, also known as a contingency fund, is referred to money you put aside in case something unpredictable happens in the future like medical bills, loss of income, natural disaster, home or car repairs.
This is critical for everyone because anything can happen. You should have this because it helps you stay out of debt. Without this, people tend to turn to their credit cards or loans to pay these unexpected expenses. This will rack up more debt for you.
While paying off your debt is important, you should also save in case of an emergency. It is best to do both for your long-term goals. By doing both, it can reduce your stress level and keep you out of debt.
Live Below your Means
When you live below your means, you can achieve financial freedom. Now, living below your means doesn't mean you should not spend on the things you love. You need to evaluate your lifestyle and take control of your money so that it doesn't take control of you.
Some people I see live frugally and only spend on things they need to live comfortably. Even if they are living frugally, they are still living their lives to the fullest. They don't spend on unnecessary things like designer brand products or brand new cars. They try not to be attached to material goods. As long as the things work for them, and they are happy, that is all they care about.
When you live below your means, you can achieve other financial goals you may have. It can be difficult to live a minimalistic life when you see new products and services all the time. You just want to buy buy buy!
By evaluating your lifestyle and seeing what's important to you, you can save so much money in the long run.
Think about the things you value in life and what you want to spend it on that makes your money worth it. Is it the experience or the materialistic things that you want? I try to balance between the two and buy what I find fits me while living a comfortable lifestyle.
Are you looking at your budget for the past 6 months and realizing you spent a lot of money without realizing it? You might be questioning what you even spent on because there are way too many things to even keep track of.
The best way to be organized is by having a list of all things you pay per month. You can make a chart or get an app to help you list out all the things you pay for every month. By listing things out, you know what expenses you need and what you don't need.
Most expenses that become very expensive down the road are usually membership or monthly subscriptions such as Netflix, gym membership, Disney +, softwares, etc. Most of the time, we forget what subscriptions or memberships we have and just pay for them without even knowing. If you are not using them often, you should cancel them because it'll cost you.
You can try Truebill to help you keep track of your subscriptions.
When you have an app to help, it saves you all the headaches and stress, and you can cancel any subscription you don't use anymore. This will save you hundreds of dollars or more.
I know staying on top of your expenses can be difficult, but if you are organized and keep track of them, you can have that extra money to spend on other things. Remember, get your priorities straight so that you can reach your financial goals in no time.
Thanks for reading, and I'll see you in the next post!
She started her blog, The Money Dreamer, when she realized the 9-5 job was not the lifestyle she wanted anymore. After designing for a while, she wanted a more meaningful life, which was freedom, so she decided to venture out. She took action so that she can live her dream life and decided to help people to live theirs by helping them how to save, budget, and invest.