Before you start saving for a trip or thinking about spending your hard earned cash, you should think about money. Where does your money go? ‘If only I earnt more, then I wouldn’t be in so much debt.’ Sometimes we end up in an ongoing moneyless cycle and live for each pay day. Some people even when earning a decent income have the same problem as people earning a lot less, it’s all about changing your habits.
Spending more as your income increases
You get a new job or you have been working at the same place for a few years and receive a pay rise. There’s no harm in trying to improve the way you live your life, such as adding a gym membership or going out for dinner with friends. Every now and again continually increasing your expenditure along with your higher income, will make it hard to get real savings behind you. So stop and have a little think about what’s important to you.
Living in the now and not caring about the future
When you can’t face something in your life, you tend to ignore it until it gets so bad you are forced to deal with it. That’s like asking for something bad to happen! When we look at our finances we often deal with them in the same way, such as looking at a credit card bill and ignoring it; then suddenly its 6 months down the line, 6 dishonour fees later, 16 missed calls and developing a tight feeling in your stomach. It’s better to make a plan of attack and just face it head on, the earlier the better. You need to fix things now to ensure a better financial future.
Start recording your expenditure
Changing your money mind-set is about knowing where your money is going. One way to keep track of this is simple, record where it goes. Once you create a habit, you will know what you’re wasting money on and what to cut down on. I started recording my spending and noticed I was wasting an extra $120 a month on my phone bill. I realised that I need to have a little more self-control with the amount of internet I use on my phone. I immediately called up my phone company and placed a spend control limit on my plan. I would never have noticed how much data and money I was wasting if I didn’t record my outgoings. At times you might need to get a reality check on your spending.
Poor budgeting & laziness
If you really want to save and reach goals, you need to budget. Create spending controls for everything in order to make some decent savings. Prioritize your financial targets and find out what you can sacrifice to get there. The key is actually sticking to a budget and constantly reviewing it.
Ignoring your debt
Interest is a killer; it adds up fast and eats away at a huge portion of your finances. It’s a painful fact and normally a vicious cycle. Paying off debt, can feel like you’re giving your money away for free, but debt needs to be the first thing on the agenda. Work out a plan to get out and stick to it no matter what.
Constantly upgrading electronics
This concept I don’t fully understand myself, but I can see how it disturbs others around me. Seeing people get into debt to get the latest gadgets to keep up with the ‘Joneses’ for example; Initially paying $30 for an iPhone 6 and then $100 a month for 24 months adds up to $2430 (when the phone upfront is $999) sometimes you need to step back and make some logical decisions about what you really need.
I hope this gives some ideas about the decisions you make with your money and how to react to different financial situations. Have a closer look at your money mind-set.