In today’s world, it’s so easy to buy new things at any time of the day. We are all blessed to live in a period of time when there is an abundance of things that we can all buy at our fingertips.
The problem that plagues our generation is not so much making sure we have enough of what we need, but the opposite. We have the difficult task of choosing what we want, when we want it, and not spending every last penny on these things.
I know from personal experience that quite a few millennials are determined to have something they didn’t have as a child. Thus, we overstretch ourselves and our finances to make up for this perceived shortcoming.
Or we’re spending more than we should trying to keep up with the Joneses.
All this leads to the fact that our hard-earned money is slipping through our fingers. Which, in turn, starts a slippery slope to becoming terrible with money.
So, if you want to stop the money drain, become more disciplined and have a better chance of reaching your financial goals, then these tips can help you.
1. Pay off your credit card debt in full every month
Even if using a credit card doesn’t cause as much emotional pain, most of us still prefer to use a credit card. WITH approximately 70% of us prefer a credit card over cash for transactions, the likelihood of credit card debt affecting your finances can be quite high.
But just because you prefer to use credit over cash doesn’t mean you have to go into credit card debt. The best way to avoid this is to pay off your credit cards in full each month.
By doing so, you avoid interest charges and can still enjoy credit card rewards. Just make sure you check your credit card regularly to make sure there are no erroneous charges not made by you.
At the same time, you should check your balance so that you know exactly what you need to budget next month in order to pay it off by the due date.
Read more: How to use a credit card responsibly
2. Open a high-yielding savings account and set aside a certain amount each month.
No matter what your debt-to-income ratio is, there is always room for savings. It may be as little as $20 per month, but this amount will increase over time. And while this small amount may not be what you need for retirement, it can still be a huge help.
The best way to top up your savings account is to budget the same amount that will be paid monthly until you reach the specified amount needed for a comfortable living.
My advice? Just imagine that this amount is another monthly bill that needs to be paid so that you won’t be tempted to spend it.
The amount you end up saving is your reserve fund. And everyone needs a fund to dip into these emergencies. Availability of a reserve fund helps soften the blow when life gets tough.
Interest rates close to 2% on high-yield savings accounts are still much better than the national average of 0.09% on traditional savings accounts. So while these high-yielding savings rates may not come close to the average return you’ll get from investing your money, it’s still nice to get interest on your savings.
In my opinion, the best high yield savings account is CIT Savings Builder.
Read more: How much should you put aside each month?
CIT Bank Savings Builder
CIT Bank Savings Builder has APY up to 1.00%. Compared to the pennies you get from a credit union savings account, that’s an incredible amount of APY.
DYou only need $100 to open an account and they don’t charge any maintenance fees. To earn the highest APY, you need to increase your account to $25,000 or you need to deposit at least $100 per month. See here for more details.
CIT Savings Builder has a completely online platform, so everything can be done right from your smartphone, just to make life easier. They are also insured by the FDIC for up to $250,000 per account type.
CIT Bank. Member of the FDIC.
3. Set your financial goals
Setting financial goals is a very important piece of the puzzle. After all, it can be extremely difficult to be disciplined about money if you don’t have clear goals.
The most effective way to do this is to set short, medium and long term goals. Here are a few examples of each type, but feel free to fill in the blanks with your own personal financial goals.
Short term goals
- Set aside the same amount each month in your reserve fund.
- Go out to dinner with friends twice a month.
- Small household projects (planting a small indoor garden, painting a room, etc.)
Medium term goals
Long term goals
4. Focus on your financial goals
Once you’ve decided on your financial goals, the next step is to focus on them. And sometimes that can be the hardest part. It’s so easy to go astray when life throws a tough ball at you.
But one of my favorite tools to help you focus is personal capital. I have been using it for years and it has really helped me see where I am and where I want to go.
personal capital
Personal Capital offers several different services for investing and checking your financial condition. But in this case, I’m referring to the free tools they offer for tracking your net worth.
You can create an account with them without opening an investment account. The money management and planning tools are the ones you are likely to be most interested in to help determine where you currently are.
You will need to connect all your financial accounts in the tool. It will be things like:
Sometimes it can be quite scary to see what your real net worth is compared to where you want to be.
But I use it as a driving force to work harder every month to increase my overall net worth. Because the faster I can increase my net worth, the faster I can reach my long-term goals.
5. Define your needs and wants
Setting financial goals and how to track them are the first steps. But staying on the right track can be tricky when life happens. This is where needs and desires come into play. There are things that we all want to have. But these are the things that can lead us astray so quickly that you get dizzy.
This way, by being mindful of whether a product/service is a need or a want, you can be more disciplined with your money. Just remember to think long and hard about any purchase before pulling the trigger. If there is a need, then go and do it. But if the thing is actually something you want instead, it’s usually best to wait at least a little to make sure you still really want it as much as you think.
Bbecause achieving overall financial goals requires a lot of discipline.
6. Reduce, reuse, recycle
When it comes to buying wishes, you have several other options that can save you tons of money. If there is an item you want to buy but it just isn’t in the budget, what other ways could there be to achieve the same goal?
Reducing, reusing or recycling may be the best option here. If there are things in your house that you can get rid of (and maybe even make money selling them), then this is one way to get a potential need. Sell your old items and then use the proceeds to buy a new item of interest.
Or, if you can reuse an item you already have at home, combined with something else to create a similar item, then why not do it? Sometimes all a table or chair needs is a fresh coat of paint to make it look like a brand new piece. So get creative and think outside the box about the things you already have.
And if all else fails, dispose of old things. You may not make money off of them, but you could potentially get a tax write-off. Plus, it keeps your space free of clutter, which can make it feel like a whole new room. Sometimes that’s really all you need.
7. Avoid peer pressure to spend
Everyone wants to have fun and enjoy the ride, but sometimes things can get out of hand. And our friends are usually the main culprits in increasing our spending. They want us to go and play with them, which could cost us more than originally thought.
Just going out to eat or drink with friends can cost $100 or more in some cases. Something that sounded so harmless has now completely ruined our monthly budget.
This is where you should create part of your entertainment budget. But once you decide how much this monthly allowance will be, you cannot exceed it. This will make it easier for you to make financial decisions when peer pressure arises. Instead of drinking two or three glasses, drink only one. Go for lunch instead of dinner, or go to a matinee instead of a movie night.
All of these options still give you the freedom to spend time with friends and enjoy life, but it won’t cost you nearly as much. And when you stick to your budget, your future self will thank you for your discipline.
Read more: The cost of friendship – how your friends affect how you spend money
Summary
In general, it is very easy for our money to slip through our fingers like water. That’s why you have to be aware of what you have and where you want to be with your finances.
Being disciplined about money is a constant challenge for many of us; GAdjusting the financial situation is certainly not easy.
I always say step by step.
