The year 2023 is in our midst, and naturally, it’s time to revisit old habits and find out which ones to let go of. From eating too much junk food to skipping exercise one too many times, these habits can be detrimental to your well-being in the long run. In the same way, inefficient money management practices can put a dent in your finances and affect your daily life when left unaddressed. These old habits can be hard to lay to rest, but doing so is necessary to protect your financial future. With that in mind, here are some money management practices you would do well to follow as the new year approaches.
If you want to handle your finances better, you need to have a clear idea of where you stand financially. In essence, this means keeping track of how much money is being shaved off your funds daily, weekly, and monthly. Monitoring your cash flow will help you set limits for how much money you should spend at a given time, especially if your goal is to boost your savings. Apart from keeping records, it may help to periodically check your bank balance and double-check the amount you have on debit and credit.
When left unmanaged, your collective debt could balloon and leave you in a worse financial state than you are right now. In the coming year, make sure to apply best practices in handling debt such as not borrowing more than you can afford, paying on time, and paying as soon as possible to avoid incurring high interest charges.
One of the most popular forms of debt that can leave you in a financial rut is credit card debt. Some bad practices involving credit cards involve putting all expenses on credit and paying them off with income from the next month; essentially relying on money that hasn’t arrived yet. Other people also charge items to credit but always go for partial payments, which causes them to spend more due to interest.
This year, make mindful borrowing a habit and always pay in full and on time. If you really need to take out a loan, consider cash loans Philippines-based alternative lenders offer. This way, the amount is smaller and the payments are more manageable.
There’s no denying that the global economy might get more precarious in the coming months, so it’s vital for consumers to acquire a long-term mindset when it comes to savings. Every payday, make it a point to prioritize saving up for your future. Even if you start with small amounts, building a piggy bank for your financial reserves may help you weather the economic storms that lie ahead. Remember, it’s better to save first and spend later than to spend first and save whatever is left.
As a rule of thumb, you shouldn’t spend more than what you earn. This advice may seem overused by now, but it’s still worth remembering when discussing good financial habits to acquire. Spending less than your income leaves enough room for savings and investments, which is the key to building your wealth over time.
If you’re not aware of it yet, the 50-30-20 strategy is a great way to curb your unnecessary spending. Essentially, this strategy divides your spending between essentials (50 percent), wants (30 percent), and miscellaneous expenses such as emergency funds and debt repayment (20 percent).
Apart from the 50-30-20 plan, it may help to trim regular expenses through small changes such as minimizing unnecessary subscriptions, finding less expensive mobile and internet plans, and cutting back on takeout. Other ways to potentially save money are opting to walk or ride public transportation, bundling home and car insurance policies, and moving to an area with cheaper rent.
Truth be told, some of us tend to go overboard when it comes to self-rewards. Proper budgeting requires discipline, and discipline requires delaying gratification until your income has replenished. If you struggle with self-control, just remember that every mindless purchase can be detrimental to your financial future. In the end, being intentional about your purchases can help prevent buyer’s remorse and secure your path toward greater financial freedom.
If you are in a relationship, you may be thinking that discussing money matters with your partner is awkward and materialistic. Still, these conversations matter since they allow you and your partner to work together towards a financially stress-free future. Open communication is the key to any healthy relationship, so start the year right by opening the floor to money matters at the right times.
That said, it’s not just your partner who needs to work with you in order to maintain the household’s financial status. If you have children, educate them about good money habits such as mindful spending and putting more focus on value rather than price. Children learn by example, so make sure to practice what you preach and show your children what being financially responsible looks like.
We all have different financial realities, but that doesn’t mean your dream of financial ease is entirely out of reach. The tips mentioned on this list are only some of the practices you can follow this year, and they are instrumental in steering the ship toward your money goals. No one can predict what’s going to happen in 2023, but following these habits may help you kick off a prosperous year driven by significant financial progress.