Becoming money smart takes a lot of time and it definitely is not an overnight process, but it is key to start learning as soon as possible. Some people go through life never learning to save, and living from paycheck to paycheck. By learning to manage your finances and getting serious about saving, you can future-proof your funds. In this post, the loans specialists at QuidMarket will be detailing three lessons to help you become more frugal with your cash and master the best financial habits.
1. Make A Budget And Truly Stick To It
Most people have played around with the idea of a budget, have attempted to use a budgeting app, or have even read an article or two about the importance of budgeting. However, many may find it difficult to stick to the budget that they create for themselves. However, to get serious about future-proofing your funds, a budget is absolutely essential.
The overall goal to a budget is to know where your money goes in order to make sound financial decisions. While it may not be the most fun thing to do, you should aim to document all of your spending, and write down how much you spend and where you are spending. Notice what this does to your budget and identify if there are any areas for improvement. Understanding your spending habits can help you to discover where you can cut expenses and how you can add more money into your savings.
2. Don’t Spend Your Whole Paycheck
When you receive your monthly paycheck, it can be so tempting to splurge, but some of the wealthiest people in the world didn’t get to where they are today by spending their entire monthly wage. Living modestly can be highly beneficial for your savings, particularly if you have put the budget together that we mentioned in the first point.
Aim to start off by living on 90% of your income and saving the other 10%. Try to get into the habit of automatically moving that 10% into your savings account to ensure that you won’t miss it. Gradually increase the amount you save whilst decreasing your living amount, ideally to 20% to 40% saving each month.
3. Be Realistic About Your Financial Goals
What are your short and long term financial goals? Take the time to really think about them, envision the age you would like to achieve them by, and how you would like to achieve them. Write them down and figure out how to reach each goal in a realistic way.
For example, if you want to buy your first home, it is essential to get serious about saving. Consider adding points about mortgage calculators, research into mortgage advisors, how much your ideal deposit would be, how much you can afford, and any other expenses that may come along with it. By writing all of this down, you can set yourself a clear path and hold yourself accountable.
There are many other financial lessons to learn to help you save and make the most of your funds, but if you need more help, please visit the Money Advice Service.