9 Ways to Be Good With Money - Why You Are Always Broke
To have good life is the dream for most of us. For everyone there is different meaning of dream. For some it may mean to have a good job and being able to afford all that we've so far. Some only dream about, others might be more into falling in love and having a grand wedding attended by the Stars. For some unsurpassed political power is the dream. It’s probable that whatever your dream, it involves money. To create long-lasting revenue, you must be good with money. Being good with money has nothing to do with the amount of money you're income. Rather it's about merging some necessary skills to ensure that you're getting the most value from your income and that you're able to nourish your requirements. In this case, your minimum need is to lead a trouble-free life.
Here are some excellent pointers on ways you can be good with money.
Change your Mind set about Money
At some point in your life, you may be indulged in the bad money decisions that you've made all your life. Your debt has accumulated, your bills are due and all that's in the bank is enough to get you that box of pizza you've been desired all day. You can't imagine a life where your money problems are all gone, no matter the point of life you're in right now. The first step to being good with money is acknowledging that you can do it i.e. changing your mindset about how you think money works for you and around you. It means understanding that you can handle your financial present and future and makes your dreams a reality. If you're facing problem in accepting that it is possible, then see people who have been in your place before and manage to get where you want to go in terms of financial independence then work with consistency towards getting that future for yourself.
It is very necessary step to have a Savings Account or several of them when looking to be good with money. In fact, experts suggest that you should have more than one Savings Account because it creates specific plans for your money. Savings Accounts serve various purposes.
First, they act as a cushion in case of an emergency i.e. when something happens you don't have to utilize money that was supposed to be used to pay your monthly student loan and car insurance to pay for an emergency. Secondly, they're useful in doing big purchases. It's suggested that one should save for big purchases instead of using credit cards. Purchasing a new machine through cash that you've saved over a passage of time means that you can afford it. Purchasing one on credit means technically it’s not yours until you have repaid the credit and interest accumulated. Nowadays, it's possible to have your bank automatically withdraw some percentage of money from your checking account and deposit it to your savings as soon as your pay rolls in. So, if you don't have a Savings Account then set up the one and sees your dream to turn it into a reality.
Budgeting involves recognizing your necessities over the time and putting a price tag on them, recognizing how much you have and whether it will be sufficient to satisfy the needs, regulating where necessary and then fulfilling the requirements. The first step is recognizing what your need utility is. The rule that applies here means that if anything is not very useful don't write it down. Alternatively, you can identify all your desires and pen down to your dreams of funding the next mission to Mars and then arrange them in a particular sequence of what is required most to what is required least. For instance, an expensive pair of Louboutin boots would come after groceries in your list and second put a price tag on the things you need or desire over the time. You're budgeting and perform the total then check how much you have to spend and decide whether it will be sufficient. If not take out the least needed items from your list and if it's more than sufficient then you can invest the difference i.e. save it or purchase that pair of red bottom Louboutins. Budgeting make sure that you live within your means because you get to involve in things you wish as long as you can afford them. It is recommended to make monthly budgets and stick to them throughout the period. This means that when there are unwarranted purchases or unaffected income, the budget is referred to before any money that wasn't meant to be spent gets drained most importantly. Don't forget to budget for fun money; otherwise, you'll end up tearing into your budget on a whim after all you are only human.
Use the Cash Envelope System
The cash envelope system works due to one major reason i.e. you get idea on how you're spending your money. When you budget, there are various key factors of your spending. For example, in one month you could be expected to pay the bills, purchase groceries and settle a loan in that same month or you might put aside some money for enjoyment and entertainment in this system. You will have four envelopes one for bills, one for groceries, one for loan and another for enjoyment and entertainment. Put the exact amount inside each of these envelopes to accomplish each of the tasks. Therefore, when you going for grocery shopping, equipped with a list in the assorted prices, carry only the envelope for groceries and put your credit and debit cards aside and deal with cash only. Make sure that you don't spend more than you plan to which a weakness is related with using cards. This is especially essential if you're at a point where you are spending money recklessly and want to get control back of your finances. Until you feel that you're back in control only use cash.
This brings us back to the issue of budgeting at the basic. Budgeting is the need to expend less or an equivalent of what you get. While budgeting one begins by pen down a list of the things that they require for the spell of time. They are budgeting for utilizing this list of wants and comparing it to previous lists. You can recognize the areas where you are required to cut down on your payouts. When you lower the amount of money you spend purchasing things or giving bills or in entertainment, you save your money.
You can cut down by increasing the time over which you budget and taking benefit of the economies of scale. So, if you're making weekly budgets rearrange it to every fortnight and then every month. Also, avoid buying food and instead cook at home. Cooking allows you to make various meals at once using least ingredients and is mostly cheaper than purchasing food. It is better to the budget for when you want buy food and when you want to eat out. When you have fully spent this money, eat only food you have cooked unless of course, you aren't giving money for it. While cutting down your payouts, find ways to earn more income. If you have a hobby that can make you a little money work on it, if you know someone in whose business you can invest for dividends, do it. You can get more disposable income by doing these two things.
Invest For Your Old Age
You'll be too old to earn any new income at some point in your life. So, you are required to start earning money now that you can spend later for your everyday necessities. The easiest way is by making investment in your employer's retirement plan, if it’s present where you work. This involves cutting off some money from your salary every month and then accruing interest until retirement or an agreed-upon time. Other ways of taking care of your money in your old age include doing investment in real estate, a personal pension that invests monthly, quarterly or yearly income or doing investment in the development or marketing of creative works and intellectual property like patents. All these ways will guarantee that you don't have to work till your death.
Devise a Plan for Paying Off Debt
Even if you have debt, still you can be good with money. All debts are not worst. For example, you may be need to take a car loan if there is a problem with public transportation where you resides or your student loans from back in college may still be affecting you. Debt itself may be not bad but paying it off blindly may take you into an even worse financial chaos. For instance, it is not advised for you to use all your earnings to pay off your debt even though doing so will make you debt-free. This is because chances are that you will get into more debt to be able to provide for yourself since you have used all your disposable income to get out of it in the first position. It is therefore very important that you devise a financial plan to pay off all your debts. You can start by writing down everything you own and calculating the accruing interest rates. If there are any, you can then prepare a plan over many years on how you want to pay off the debt considering your expenses and your income. In a situation where the debt is accruing both interest and default payments have a talk with your financial provider and devise a plan that will not cripple you financially.
Ensure That You Get Value
There are two methods to get value by ensuring that you don't just go cheap and by ensuring that you're in assessments will result in acceptable returns. Cheap is expensive. When something is low-priced that means the production cost was low which means that there was a compromise on the quality. Therefore, such a product is probable to lose value over a short time. However, when you make a point to get value for your buying, you search for a product that will benefit you well for a reasonable period of time. You're better off purchasing a pair of shoes at $100 which will benefit you over a year then one which you purchase at $40 only for it to benefit you only two months. Getting value for your investment requires making a resolution that the money you are giving up will have a reasonable amount of returns i.e. avoid putting your money into investments that seems too good to be true or are not worth the value they claim to have. When you get the good price for your buying and investments you are on your way to becoming good with money.
Deal with the Money Issue That Bugs
Sometimes you may have a small issue related to money that troubles you. For instance, a small service charge from the bank could be haunting you. Such a small issue could be a burden that you carry around and might seem more demanding than it really is. So what do you do? Deal with it. You would be surprised at how much money you can save or how much more you can earn by simply dealing with a small issue that troubles you. For example, dealing with an unwanted service charge means that you can keep more of your money.
If you're performing at least 50% of the things we just discussed, you're well on your way to being good with money, maybe even funding the next mission to Mars.