Many people do not realize that in order to properly save money, there are some ways that they can better prepare. In fact, it is important that a person creates a strong foundation so that it will help when they are actively saving money!
Changing Your Mindset
The first step that a person can take is to change how they feel and think about money. There are common ways that people update their mindset with finances.
1- Identify and Understand Spending Patterns
Impulse spending happens a lot more than people would like to admit. Oftentimes it is in the form of emotional spending. When people feel upset, they like to cheer themselves up with a purchase whether that be food, clothes, makeup, or whatever else they may want. They may even turn to buying treats for other people like a toy for their pet, a gift for a family member, etc. Regardless of where the gift is going, money is being spent. Other forms of impulse spending include buying items you don’t need. An example of this would be when you are at the grocery store and buy items that are not needed and not on your list. Once you identify these behaviors, you can counteract them. Try meditation, reading, cleaning, or anything else to distract from any spending. You can also set locks on your card if the temptation is too much.
2- Don’t Feel the Pressure
Many people like to follow trends of society. If everyone is buying a specific brand purse, you may also want that specific brand purse. However, you need to make sure that you understand the value of the purse and when is the right time to make the purchase for yourself. If you want a specific purse, then plan to save up for it and buy it when the time is right, and your finances are in order. You also want to make sure that you make purchases that make sense. If the trend is to buy a fanny pack, yet you will not wear it, then why buy it? You need to ask yourself these questions before making any purchases.
Creating a Smart Financial Management Plan
Once you find that your mindset about money is in a better position, then you can create a money management system that works for you. It can be too easy to recklessly spend money. No financial order means no reward. Instead, you want to create a budget plan. This plan will properly allow you to manage your money in a way that does not need to feel extreme.
Before you can make a budget, you want to understand how you spend money. Take the amount of money you make after taxes every month. Then you want to take away the bills that you pay for. For example, after taxes if you make $1,000 and your bills are $350 then the rest of your available money to “spend” is $650. From there, you can figure out what to do with your $650. Whether that partially goes towards debt and partially towards savings, all towards savings, etc. It is important to set both short term goals and long term goals for yourself. You need to figure out a plan that works best for your current situation. If you struggle with your debt and what to do then you can use resources available to have debt experts assist.
Once you have a budget set you need to stay on top of it! It is important to continuously track spending to make sure that you are reaching your monthly goals. Once you reach both your short term and long-term goals then you need to start the process all over again to create new goals or make sure everything should stay the same!