It’s never too late to learn new budgeting practices and make your money work for you.
And as the new year approaches, there’s no better time to make a commitment to sorting out your personal finances and boosting your savings.
It’s important to note that being thrifty and isn’t just about not spending money, but not wasting your money.
To sort out your savings, it’s vital to be intentional and mindful when spending money. This can be a real turning point, because you’ll begin to value things a lot more when you see the worth in them.
Money is not the end goal – this can lead to bad decisions like choosing the wrong career or the wrong car. Money is a tool to give us choice and freedom. Reframing this will help you make better decisions with your savings journey.
Below, I share my essential money habits to adopt for 2021, to help you feel more in charge of your finances when the world can feel out of control.
Embrace the 30-day rule
This one’s simple: before you buy something, wait 30 days.
This is a great habit to get into to stop impulse purchase decisions. Adopting the 30-day rule was key to the success of my no-buy year.
It gives time to properly evaluate if you really do want the items you would normally click to buy without much thought. The chances are that once the 30-day period has passed it’s unlikely you’ll still be as inclined.
Pay yourself first
Set up auto deposits to savings and investments so that this is automated before you have the chance to spend it on other things throughout the month.
Then you pay your bills and can take out some fun money and spending money if there’s enough left over.
Watch out for lifestyle inflation
Don’t inflate your lifestyle when your salary increases – make sure you spend less than you earn, otherwise you’ll be no better off.
It’s tempting to splash out with the increased money you now earn by buying a bigger house or nicer car… but this can lead to over-spending.
Consider investing in experiences that can really enrich your life, rather than more ‘things’.
Set clear goals
Figure out where you want to be in five or ten years’ time, so you have a clear path to get you to this goal.
This will help stop over-spending and keep you on track with your savings.
It’s important to always have a clear target in mind to keep your motivation to save going strong.
Educate yourself on money and finances
Informative podcasts and self-development books can provide you with financial literacy and help you to adopt healthy money mindsets.
Mixing with other people with similar goals can also help you develop your own self as well as keep you on track.
Build more than one income stream
Don’t put all your eggs in one basket – as we’ve learned in 2020, things can change very quickly and if you lose your job you could be left in a precarious position.
Learn the difference between liabilities and assets
This can help stop debt accumulating.
Liabilities can be a house that you have a mortgage on, or a car that needs a lot of money spent on it, whereas assets like investments or cash will put money in your pocket, and not take it out.
Shop secondhand and cut back on fast fashion
Shopping second-hand can be a sustainable way of saving money as well as contributing to the decrease in worldwide waste.
Being more mindful about fast fashion wont just save you money, but it can help the environment too.
Prioritise being debt-free
Get out of debt as quickly as you can and stay that way. Better still, avoid bad debt in the first place.
Some debt can be good, such as a small credit card debt that you can pay off in full each month, as this will help build your credit score.
But make sure you don’t default on repayments as this will negatively impact your credit score.
Check your monthly outgoing and make sure you have the best deals
on’t just let your insurance tick over each year because you don’t get round to researching the best deals. Often loyalty doesn’t pay off, sadly.
Moving to other providers can save you lots of money – so make the effort to check up on all those regular spends that depart your account each month.
Work on having an emergency fund
If this year has taught us anything it’s that an emergency can strike at any time, so make sure you have at least three (or six if you can) months’ salary saved up in case you lose your job or fall ill and are unable to work.
Finally, and most importantly, don’t equate your success with material possessions. True measures are health, love, quality of life and other non-physical things.
Once you start building these money habits you will soon feel much more in control of your finances and with that comes a lot less stress and worry. You’ll never regret being good with money, but you will regret letting bad money decisions rule you.
Don’t forget to head over to my blog, my YouTube channel and Instagram for daily money saving advice, tips and hacks for living your best life on a budget.
For more money-saving advice as well as chat about cash and alerts on deals and discounts, join Metro.co.uk’s Facebook group, Money Pot.
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