Image: rawpixel.com // pexels.com
By: Monsoor Kalam, Project Coordinator
We should all be able to say, “I am in control of my day-to-day finances, and that if I were to have a financial shock I can overcome with what I have saved.” But, not many of us can confidently state this. Much of this uncertainty, comes from not feeling comfortable with managing finances, however it doesn’t take a financial analyst or a business guru to take the small steps to become financially secure. Try out the following tips to get yourself started on the path to improving your financial wellbeing.
Write Out a Budget
Write down how much you expect to spend on groceries, transportation, rent, etc. Then keep track of how well you are meeting these goals. Writing out where your money goes, really helps in making your purchases tangible. Much of the time, we buy things with cards and never really feel the money leave our pockets. However, keeping tally of each item we buy is a great way to put the purchases into perspective and help identify and limit impulse buys.
Identify Needs .vs. Wants
Identify what the essentials are in your life and what are things that can be lived without. Then slowly try to ween yourself of some of the wants. An example, coffee, it is one of the biggest wants in life, whether you’re a college student or a working professional or even stay at home parent, coffee is an expensive habit. We spend on average $3 a day on coffee, which adds up to $90 a month. Is it worth it? Or would you prefer to have an extra $90 dollars a month? Cutting out coffee, you put a good chunk of money back into your accounts. This practice of cutting back or cutting out can be done with a number of things we consume frequently and in the long run, it will save a lot of money.
That being said, sometimes we want what we want, and it isn’t healthy to hoard money either. It is ok to “treat yo self” on occasion, as long as it’s within your means. This ensure that you keep a balance in your life.
Practice Contentment
When you do purchase something, appreciate it, try your best to be mindful. Take in the usefulness of the item as well as the fact that you have the object in the first place. By learning to appreciate what you already have, and feeling content, you will want less and spend less. Once you start practicing contentment, you’ll be able to avoid the pressure of having the newest and biggest items.
Think Long Term
Thinking in the long term will help you adjust your spending habits. Knowing that in the long term you can save hundred and even thousands of dollars, will hopefully motivate you to practice mindful spending.
Pay Yourself First
Have at least two separate bank accounts, one for your day to day needs, and another for savings. When you get a paycheck, or any source of income, pay your bills and utilities first, but once you are done with that, pay yourself. By that I mean to act as if your savings account is a bill that you HAVE to pay, and pay it. Set an amount that you “owe” yourself and hold yourself accountable to it. If possible, make this set amount 10-15% of your income.
Once your money is in that savings account pretend it isn’t yours, don’t touch the money unless it is absolutely necessary or you plan to invest it. The money is a last resort account, and if you treat it as such and make regular payments, you will have a sizable savings in no time.