If you need to overhaul your spending habits and take control of your finances you need to realize that it is definitely possible, but you need a roadmap first. The three golden rules in this post can help anyone take back their financial independence and get on the road to saving more and spending less.
Spend less than you earn
Money doesn’t grow on trees, and it’s important to spend less money than you earn. This sounds obvious, but many people overspend simply because they don’t know how much they earn and how much they spend. That’s why it is imperative to create a budget.
Try tracking your expenses for three months and work hard to spend less than you earn. Make a list of debits and credits, eliminating unnecessary purchases from your life. Every time you go to buy something, ask yourself how much it adds to your total expense and if there’s something else you’d rather spend your money on.
Don’t shy away from confrontation
Many people dread looking at their bills, their bank accounts, and their credit scores simply because they don’t want to confront their financial situation. Don’t be afraid to grab your spending by the head and really sit down and take a hard look at your finances. You’ll never be able to improve your situation if you don’t understand your current standing.
So jot down everything you owe and make a plan to pay it off. No matter how difficult this is, it is much more difficult dealing with the consequences of bad credit.
If you work at a fast food restaurant, you’re probably not going to drive a brand new BMW. It might be tempting to try to keep up with the Jones’, but how about forgetting about the Jones’ and keeping up with yourself? Your lifestyle should somewhat reflect your means. That’s not to say that if you have a low paying job, you can’t have nice things, it just means that you should strive for attainable goals.
Setting realistic goals and reaching them will fill you with a sense of accomplishment. That feeling will propel you to reach farther and work harder to achieve your next goal and so on and so forth. This can be difficult to accept in our current culture of instant gratification, but give it a try. Once you work towards a realistic goal and you reach it, you’ll be hooked.
These three simple rules can help anyone gain a better perspective about their finances. Talking about money is often taboo, but being open and honest with yourself about your finances can help you reach your goals. Having a happy and healthy relationship with money will help reduce stress and lead to greater happiness and even greater physical health.