Tag Archives: money management

Money habits to build your financial wealth and health

Money Management

Yes, we all have some good and bad money habits. Flossing, regular exercise, good night sleep are all good habits when repeated over and over again. However, there are some bad habits that can sabotage your financial health. To achieve long-term financial wealth we need to turn off the autopilot and start making some active and careful decisions about how you mange and spend your money.

Bad money habits can be extremely hard to break. They could be ingrained in us from our childhood and upbringing or from the simple lack of knowledge about personal finance. Even with the best of intentions and disciplined financial planning, there are still some habits that continue to sabotage your money success.

Here are a few ways how people mismanage their spending habits and cause havoc to your bottom line:

  • Avoid all forms of emotional spending to deal with life’s ups and downs; it does not fix anything but makes things worse. Set yourself some ground rules and opt out of marketing emails from your favorite stores.
  • It might be admirable to lend money to family and friends but if they cannot repay you; it might lead to conflict, resentment, and hurt your relationship.
  • Picking up the check when you go for dinner or for a round of drinks might be a great source of pride, but if you are going into debt or putting off important expenses because of this, then you have gone too far.
  • All debt is not equal. Simply rank your debt in order of highest to lowest interest rates and then prioritize paying off the debt with the highest interest rate first.
  • If you have invested your savings in the stock market and there is market tank, don’t panic and sell. Withdrawing your money from stocks will only make you miss out on any rebound.
  • Comparing and measuring success by the house your own or car you drive is a false assumptions. Keeping up with the Joneses can be tempting but you don’t know if your neighbors are living above their means.
  • Incorporate a spending filter into you life when making expensive purchases. Before making those impulsive and expensive purchases, give yourself at least 24 hours before going through with the purchase. It is important to distinguish between need and desires. Taking time to evaluate your purchases also give you time to surf the internet for a better deal.
  • Not monitoring you credit score can seriously hamper your plans for the future. Missing a bill can be reported and effect your credit score. Remember it takes time to clean your credit score and a bad credit score can have a huge effect and financial implication if you are looking to taking out a loan or mortgage.
  • When it come to that time of year when raises are being handed out at work, don’t be afraid to ask for a raise. If you don’t ask, you don’t get, and the vast majority of people who do ask get something, whether it’s a salary bump or another type of incentive.
  • After paying the monthly bills, it is up to you how to decide what to do with the money that is left over. Spending it all instead of saving and investing the remainder can become the norm. This often leads to not having a “rainy day fund” or money for emergencies. It is a good idea to save 10% of your income for retirement and aim to have at least 6 months worth of living expenses in an emergency fund.
  • Combining your personal and business life is very easy but this can a major implications when it comes to tax season and cause a major headache for you and/or your accountant. Well, you accountant will get over the headache but also charge a higher fee for their time.
  • Try avoid as many banking fees as possible. Banks make money from the fees they charge you and one easy charge to avoid is ATM fees. Avoid using out-of-network ATM machines and incurring higher fees. Also, think about switching banks that waive ATM fees.
  • If you use credit cards to live, then it is good idea to understand exactly what you are doing with your money and how the interest on your credit cards effects you. Paying the minimum balance will only take you years to pay off the debt.
  • Get rid of all those subscriptions that you don’t use. How many of you decide to join a gym this time of year with a goal to lose a few pounds but have still not gone to the gym.
  • Avoid buying coffee, lunch, and snack on a daily basis. There’s no getting around it — money is irresistibly easy to spend, especially on the small stuff. Do a simple calculation, one latte a day will cost you how much per month?
  • If you avoid checking you bank and credit card statements or keep track of your spending, then you are living in a money coma. Get help from a friend, family member, debt counselor, or financial planner to assess your financial situation and develop a plan for improving it.

Remember getting rich is long-tern game. Accumulating wealth is entirely up to you and keep in mind that it takes time, patience, and smart habits.

Money lessons for students and teenagers

money management

The odds are you graduated from high school without being taught or have basic knowledge of money management. Not many schools teach students how to manage their personal finances or the basics of money management.

If you are struggling to make ends meet, is it simply a task of either earning more or spending less. It is important to be disciplined and make sure you pay your rent and bills first from your paycheck. When you are shopping, try avoiding any impulse purchases and when it comes to any big-ticket items like a vehicle or computer, take 30 days to decide before making the purchase.

Here are few quick tips to help you brush up on your knowledge and skills of personal finance.

Basics of budgeting – The key to budgeting is to know how to list and prioritize your spending and savings. All students should create a realistic monthly budget, identify how much money is coming into your bank account, then prioritize your spending. Remember to always save a percentage of your income. Don’t forget o keep tabs on your spending.

Understand the time value of your money – If you can save a small amount of money daily, this will do wonders for your long-term financial wealth. Taking simple steps to save money will allow you to accumulate money over the long-term.

Understand the difference between a saving account and checking account – As the word states, a saving account is an account to deposit money and watch it grow. A saving account is not meant for daily use to pay your expenses, this is your checking account.

Avoid building up any debt – If you accumulate debt via students loans, auto loans, or credit cards, can cause major damage for your personal finances. If you miss any payments can tarnish your credit profile or score, and in some instances difficult to recover from. Always keep your first credit card and make sure to make payments monthly.

Understand how credit works – Building a high credit score will mean that you will be seen as a trustworthy person in eyes of banks, insurance companies and auto lenders and retailers. Start with a checking and saving account, and once you are offered a credit card make sure to make monthly payments in full to build your credit score. Before a applying for a credit card or mortgage, for example, check your credit score beforehand.

Don’t be afraid to haggle – There is no shame in trying to haggle for a better deal. Ask retailers if they have student policy and discounts. Look for coupons or specials when making a purchase. Search for better deals to compare pricing online.

Understand the dangers of debt – Debt is part of life and unavoidable. In some instances it is also necessary. Understand that credit card interest rates are very high and debt can spiral out of control very quickly. Managing personal debt is probably the most vital lesson you need to learn.

Shop around for the best financial products and deals – Before jumping into any purchase it is important to understand the choices you have and on offer. Do some research before opening a bank account and don’t be afraid to switch institutions for a better deal.

Always check you bank statement – Try getting into the habit of checking you’re monthly bank statements when they arrive and look for any unexpected charges.

What is compound interest – Compound interest is a very powerful and grows your wealth quicker than thinks but can also make it harder to clear any debts.

Start saving for retirement early – It is recommended to take at least 10% of your paycheck and place it in saving or in a pension fund for your retirement. Start saving early in your career and you will have the security to retire and have a comfortable life.

Invest your money properly – Learning to invest is one of the main ways to making more money and building your real wealth. There is no quick get rich scheme. Invest your money and grow your wealth slowly, diversify and reduce the risk of your investments, avoid any unnecessary fees, and invest with zero emotions. Perhaps consult and get advise from a fund manager.

Watch out for identity theft – Young adults are more vulnerable than any other age group for having their identity stolen. Remind your child to guard personal information, password-protect phones and laptops, and shred credit card offers or other mailed applications.

Things Every Student Needs to Know About Money

Money Management

As a student your first job is so exciting, this is the start of your professional life. Remember now that your financial career starts NOW too!

  1. Know how much you will need up front to move and start your life.
  2. Know what your NET salary will be.
  3. Track your expenses and income on a spread sheet
  4. Understand cash flow.
  5. Keep an emergency account.
  6. Know when to use a debit card or credit card.
  7. Get the right insurance.
  8. Start a saving account immediately.
  9. Don’t be afraid to invest.

Use Apps that will help you in all these aspects. In today’s world there is no excuse to be disorganized.