How confident are you about managing your finances?
Is your answer “super confident”? Then you may hit ‘x’ on this tab and continue surfing social media.
If your answer is “not confident” or “pretty confident, then you could benefit from a smarter approach to managing your money.
It doesn’t matter who you are and how much money you make. Everyone can be financially successful at managing their money when practising these 5 smart financial rules.
1. Always pay yourself first
The first thing many financially successful people do when they get paid is save a portion for their future selves.
This means you should never save AFTER spending because it’s very likely you won’t have much left to save. Before you go treating yourself or paying for your gym membership, make a rule to always set aside money for future you first.
How much should you set aside then?
A good rule to follow is the popular 50%/20%/30% rule:
- 50% of your income should go into your necessities such as rent and phone bills, etc.
- 20% should be saved for yourself
- 30% goes into your wants, such as bobba teas and Korean bbq’s
2. Track every expense
It doesn’t really matter how much money you make – it’s how much you spend that makes the difference to achieving financial success.
Download a spending tracker app on your phone and make it a habit to record everything you buy. This will always give you a clear report on where your money is going as well as give you a sense of where you’re spending too much.
3. Spend less than you earn
It’s simple – if you want more money, spend less of it! There are many who spend beyond their means; maxing out your credit cards and spending money just because you have it, are not habits that financially successful individuals practice.
Financially successful people live well below their means so that they can invest their money and increase their wealth. It’s incredibly difficult to achieve financial success when you are trying to keep up with a standard of living you can barely afford.
How do you tell if your standard of living matches your means?
If you find yourself having no money left over at the end of the month (after savings and necessities), perhaps it’s time to cut down on fancy dinners, branded goods and night-outs.
4. Don’t buy into discounts and shopping deals
Cashback rewards, discounts and shopping deals are great…
…Only if you set out to buy the discounted item in the first place.
Promotions and discounts can be distractions from financial growth for things you don’t necessarily need. What that means is that if you didn’t really want the item before you saw the promotion, you could probably do without it for now.
You might feel like you missed a great deal, but it’s useful to remember:
- There will always be something on sale
- Brands will always offer prizes and rewards for your money
- There will always be a promotion/deal for something else you want in the future
Investing in your future means putting off some things you want now. Focus on decreasing your spending, pay attention to what you are purchasing daily and avoid buying extra things just because they offer immediate rewards. In short, it’s helpful to memorize ‘SODI’:
- Organize expenses
- Decrease spending
- Ignore discounts