I’ve shared in the past fundamental principles of successful money management and how this is essential for financial independence. Today, I want to impart a few simple, actionable, everyday tips you can incorporate into your life to better manage your money.
As financial literacy expert, I can say with confidence that taking small steps to improve the day-to-day management of your finances will have a profound effect. To paraphrase an old aphorism: Our choices become our actions; our actions become our habits; our habits form our character and our character is destiny.
Here are six key money management tips that will help you secure your financial future:
Tip #1: Leverage Small Wins
Studies have shown that progress, however incremental, is the key to sustained success. The Progress Principle shows that when we experience a win, no matter how small, we receive a powerful emotional response. By setting small, measurable, daily financial management goals, we can create self-reinforcing feedback that will spur us on and help build smart habits.
Tip #2: Write Down Your Goals
Having a financial goal to work toward is important. But a goal that never goes beyond an idea and that is not assigned a deadline is unlikely to become any more than a mere thought. If you are struggling to translate your thoughts into action, write them down. Sometimes, the small, simple act of making something tangible is enough to spark a commitment.
Tip #3: Pay Yourself First
Paying yourself first simply means you take the first five or 10 percent of your income and immediately save it. This is a fundamental part of effective money management and, ultimately, financial freedom. If you have to make cutbacks or sacrifice immediate gratification, do so. The long-term reward is worth the short-term sacrifice.
Tip #4: Harness Technology
The advent of new technologies has made money management, saving and investing easier than ever. There are a variety of useful apps you can use to budget, save, track spending and pursue money management goals. They key is to find what works for you so you are more likely to stick with it.
Tip #5: Don’t Pass Up Free Money
If your employer offers a five percent 401k match and you are only contributing three-percent, you are passing up what is essentially free money. Whenever possible, always match your employer’s contributions. If you have the option of earning savings or loyalty rewards but don’t use them, look at how you can take advantage of the savings.
Tip #6: Take Informed Action
Behind on your student loans? Check into one of several federal debt relief or repayment plans. Do you feel too far in debt to effectively save or manage money? Apply these negotiating tactics on your creditors. Debt settlements or forgiveness can have consequences from a tax perspective as well as on your credit score. Be sure you fully understand both. The key is to take informed action and give yourself the financial breathing room to get your finances in order.
The Bottom Line
Smart money management is instrumental to achieving financial independence. By taking small actionable steps today, you will have the power to create a better tomorrow. Don’t delay. Start incorporating these tips daily to make your dreams a reality.
Contact me today to learn more about financial literacy and securing your financial future.