5 Bits of Financial Advice Most People Don’t Take
Friday Jan 10th, 2020Share
1. Run your finances like a business. You should treat your budget like a business, because in the business of life, the bottom line matters. Many of the same principles business owners use can be applied to your personal life: prioritize your spending, assess your profits and losses, and don't lose sight of the big picture, like saving for retirement or getting out of debt.
2. Make saving part of your lifestyle. Saving money doesn't always come naturally. Successful savers usually fail a few times (or more) before they figure out what works best for them. People who live with less and save more get ahead in life. Be like the tortoise in the Tortoise and the Hare. Even shrinking your grocery bill by just $15 a week will save $780 a year—imagine all the other little cutbacks that are possible.
3. Automate the process. This is a piece of money-saving advice that is echoed by nearly every financial expert. Paying yourself first is the first step, which means setting up an automatic transfer from your paycheck into a savings or investment vehicle. You can set up one large transfer to go through monthly, weekly or whenever works best for your finances—as long as it's automatic, you'll be saving without even realizing it.
4. Pay off your debt. Being in debt can literally ruin you. By saving for major purchases instead of putting them on credit cards, you may have to delay gratification, but you will win in the end. You’ll save thousands of dollars in fees over your lifetime. Also, by developing a habit of saving vs. borrowing, you’ll be less likely to make extravagant purchases, and be more satisfied with fewer big purchases.
5. Trick yourself. Many behavioral economists say mental accounting (i.e., treating different piles of money with different intentions) helps trick your brain into better budgeting and saving. This strategy might sound a little complicated, but it’s really a take on the classic envelope system, where you allocate your paycheck to a weekly or monthly budget and put the cash into different envelopes – one for each budget category. Once the envelopes are empty, your budget is maxed out.