Practicing healthy financial habits is a big step towards a prosperous future. To help you get started with that, we’ve got 11 practical money tips you’ll find useful:
Live Below Your Means
The biggest problem for a lot of people is that they spend more than they earn. They buy a nice, big house in a high-end neighborhood just because they want to impress all their friends and family. Instead of putting on a “rich” image for others, it’s better to just live below your means so that you have more money coming in.
Self-made millionaire Grant Cardone admits that he was still driving a Toyota Camry when he became a millionaire. He had been putting off buying his first luxury watch and car until his business ventures were bringing in stable and constant flows of income.
Living below your means doesn’t mean saying NO to all the joys of life. You just need to use some creativity and reason. Having a date night at home can be just as much or even more fun than going out. And you don’t need to rush out to buy the newest smartphone model if your phone is working just fine.
Unfortunately, it’s nearly impossible to become rich if you’re working hard (using time) for every single dollar. Of course, most of us work this way and our time literally equals our money. For most millionaires, it’s completely different. They don’t earn money just by spending time at work. They get their money to work for them. So their time is more valuable than money. That’s why it’s really important to have some passive income.
One way to do it is through investments. Investment guru Warren Buffet recommends investing in something you know. If you aren’t a financial guru yourself, consult an expert to learn about all the risks and opportunities.
Follow the 50/30/20 Rule
This rule is a great budgeting technique. The idea is to divide your income into 3 categories. The 1st category is necessities. You should allocate 50% of your income for monthly expenses like rent, transportation, utilities, groceries, and basically things you can’t live without.
The 2nd category is personal spending. It means you can use 30% of your salary for entertainment, shopping, hobbies, and anything that makes you happy.
The last category is savings. Put 20% of your money straight into your savings account or investments.
Grant Cardone says it is crucial to have some untouchable accounts that you can’t use even for emergencies. He explains that he always invests his surpluses into ventures he can’t access even when he’s broke
Always Have “Plan B”
Today you might have the job of your dreams and a steady income, but nobody knows what will happen tomorrow. In addition to saving up a part of your salary in your own emergency fund, get yourself ready for a big crisis, such as when your salary stops coming in. Think of other skills you have and work on developing them in your free time. Expand your professional network. Talk to people and keep their contact info. You never know where a new job might come from when you need it.
Avoid “Poverty Thinking”
Never say things like, “It’s too expensive” or “I’ll never be able to afford that.” See that high price tag as a target you can potentially overcome, not as a permanent barrier. If all the goods and services in the world were cheap, people wouldn’t have to work hard to get them. See money as something you can earn and build up, not something that keeps you down and crushes all your dreams. It’s all about your thinking.
Buy Things in Bulk and On Sale
This concept is easy to understand. Buying in bulk saves money. But this rule only applies to goods you’ll actually use and won’t go bad.
Don’t be embarrassed to use coupons or vouchers. Wait for that cool gadget to go on sale or compare prices among different retailers before making a buying decision. After all, a penny saved is a penny earned.
Write Out a Detailed Financial Plan
Budgets aren’t only for businesses and governments. Just writing, “I’m going to try to save more money this year” isn’t enough. Set specific goals and create a detailed plan on how to achieve them. For example, if you want to go to New Zealand next year, calculate exactly how much the trip will cost.
Take a look at your monthly income and subtract all your necessary expenses from it. In the end, you’ll see how much money you need to save each month and for how many months. Setting long-term goals is even better. They’re excellent motivators to keep yourself in check.
Millionaire Timothy Sykes says that such goals enable you to look beyond the moment and put into perspective why you’re spending your time today the way you are.
Make sure what you’re doing on a daily basis is moving you closer to your goal. If it’s not, think of what you can change.
Try Out “The Rule of 100”
The Rule of 100 simply means doing 100 of something in a year. It could be 100 workouts, 100 speeches, 100 workouts, and even 100 cupcakes if you like to bake. It’ll not only make you way more skilled in whatever you’re doing, but also keep you motivated and organized. This principle will help in any job because practice makes perfect and perseverance leads to success.
If you have your own 100 in mind already, start today.
Buy Straight from Manufacturers
Before you buy something in a store, stop and ask yourself, “Can I cut out the middle man?” You’d be surprised by how often you can actually order something straight from the manufacturer. And the price is almost always lower.
You might face a minimum order quantity though. In this case, you can recruit friends or family members by enticing them with the low prices.
For example, Jerrod Sessler, founder and CEO of Hometask, was fed up of paying too much for organic produce. He decided to try buying from the wholesaler. The minimum order amount was $250, so he teamed up with friends to get what they all wanted for a way more affordable price.
Surround Yourself with Successful People
This idea is easily explained by how much the people around you influence your life and mindset. If you get along with talented people who share your vision, it’s easier to generate creative ideas and bring them to life. If you need to find some successful people, you can meet them at networking events, webinars, or on social media.
Steve Siebold, author of “How Rich People Think”, explains that your own net worth mostly mirrors the level of your closest friends. It’s best to avoid people who drain your energy, or pull you down emotionally and don’t support your dreams. Surround yourself with people who not only inspire you, but also encourage you to take action and dream big.
Stay Away from Credit Cards
If you have a credit card, you’re treading on dangerous ground. Credit cards encourage people to make impulse purchases regardless of whether or not they can actually afford it. By using a credit card, you’re essentially spending money you don’t actually have. Plus, that added interest on your monthly payments mean that you’re spending more on the same items than if you simply use cash or a debit card.
Do you already follow any of these tips? Or maybe you have your own secret money tip that works for you? Please share them with us in the comment section. We’d love to hear from you.
