Managing Your Finances: 4 Top Tips
We are constantly bombarded with advertisements and opportunities to spend. It is easy to make bad financial choices, from impulse buys online to that over-priced pasta you bought from the deli rather than packing yourself a lunch.
But don’t lose hope. A few, small changes and a few good habits can be transformative for your finances. To make a change, you need to plan for your financial future. Using these four top tips to think about where you want to be and what you need to get there.
1. Create a vision board
Don’t be afraid to be ambitious. Get an oversized piece of card or paper and find yourself some old magazines. Grab some scissors, have a flick through the magazines and snip out any words or images that resonate with you. Then, stick them on your paper or card.
This is your vision board. It is an overview of what you want to achieve in the next year. There may be some more practical goals, like a new kitchen, or some more extravagant ones, like a luxury holiday. No matter. Sit down and think about what it would take for you to achieve or move towards these goals over the coming year.
2. Reflect on your spending habits
Why do you spend the way you do? When you understand your attitudes around money and why you feel the way you do, you can get to grips with bad financial habits.
Think about the false ‘truths’ you have accepted about money; think about how you were raised and how this has shaped your financial beliefs; think about money in your household and whether it was a source of arguments between your parents; and think about the positive and negative experiences you have had related to money.
In particular, pay attention to your internal dialogue and try to improve how you talk about money to yourself.
3. Reflect on your future
It can be intimidating to set long-term goals. To make it easier, divide your goals into different areas. Create a table and list ‘property,’ ‘personal life’ and ‘career’ as headings. Then, divide your financial goals in each area into 10-year, 20-year and 30-year parcels.
You can always divide goals further into mini-goals such as going away for the weekend or even launching your own company. Every year, check your progress against these goals. Put a big tick beside each objective you achieve and keep going!
4. Harness the power of technology
A lot of banks allow their customers to open additional accounts and divide their money across them to make it easier for customers to save and allocate funds.
Think about creating three separate accounts for different needs. Account one can be for bills and essentials. Account two can be a personal spending account to cover any outgoings that concern only you. For example, this account can be used to pay for your cell phone bill or as a personal savings account. Set up a direct debit so that money is automatically deposited in this account each month. The third account can be just for fun, whether it be a night out, a new outfit or a holiday. However, once the money in this account runs out for the year, that’s it!