Not having money isn’t the end of life. You can still enjoy your life, but taking control of your financial life can make it even better.
Because the paycheck to paycheck lifestyle is something that causes the most stress in people’s lives.
In fact, a recent survey by the American Psychological Association found that money is the leading cause of stress among Americans (Finances: 35 percent, Annoying Habits: 25 percent, Other: 15 percent, Children: 12 percent, Relatives: 7 percent, Jobs: 5 percent)
If you’re suffering from financial stress, keep in mind that you’re not alone and there are plenty of money habits you can learn today!
Scroll down to the bottom and learn the money habits of people who have always controlled their finances.
Remember that having control over your finances helps you not only in managing your money, but also in your life.
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1. They save for their goals.
While some people spend what they earn, regardless of how much that is, others always save to reach their goals. Whether they’re saving to buy a home, to pay off their credit cards, to live comfortably after retirement, they always save to realize their goals.
They even save more than they think they can. They don’t let their expenses determine how much they save. They decide to save and make it automatic.
So definitely take some time to identify your goals and make a plan. Nothing happens without a plan. Identify your financial goals and set a time frame. When would you like to reach these goals? In 1 year, 10 years, 20 years?
Remember identifying your goals is the first step in achieving your goals. Identify and prioritize your financial goals. And revisit your goals annually.
Also feel free to check out these additional resources from Money and Financial Literacy:
- Make Money
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2. They avoid debt.
Today, debt is an inevitable part of life. Without it, it would be impossible for most people to buy a home or a car.
So debt isn’t all bad. However, you should keep in mind that you need to control and manage it.
The key to controlling and managing debt is simple: Spend less than you earn, and if you can’t afford it, don’t charge it (P.S.: Think twice before taking out a loan).
Besides, you need to learn basic personal finance principles before getting into debt. Because without knowing how to budget and how to live below your means, it’s impossible to control and manage debt.
Also, it is important to know the costs. You should know what you are paying in general. You should know your credit card interest rate, and your statement due date.
The bottom line is that you have to manage your own debt, and make the necessary lifestyle adjustments to avoid debt.
3. They follow a budget.
After defining your goals, you need to develop a plan to manage your cash. This means you should make a budget and stick to it.
Budget is based on your goals and financial obligations. It helps you to follow how much you earn and spend.
There is no question that people who are smart with money always make a budget and follow it.
So achieving financial goals begins with keeping track of what comes in and what goes out. Remember that nothing happens without a plan.
4. They have an emergency fund.
Having enough money to cover three to six months of expenditures is the basic personal finance principle. An individual or a family should have enough funds for unexpected expenses.
People who always have money know this basic principle and have funds for emergencies. Having an emergency fund helps them to plan for unexpected events and keep them from having to take on debt when they need money immediately.
So start taking responsibility for your life and establish an emergency fund before you have an emergency!
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5. They invest.
After building up an emergency fund, it is time to start investing. People who always have money start investing early to meet their financial goals.
So you should start investing as soon as possible. You can start investing with very small amounts like $50 per month. You can try stocks and mutual funds.
Remember that the key point while investing is consistency. You should build a saving and investing habit and regularly put money away every week or month.
Also you should keep in mind these things while investing:
- Define your goals: You need to write down your financial goals. What are you investing for? Retirement? Buying a house? Once you define your goals, it’ll be much easier to assess your risk tolerance and find investment tools according to it.
- Do your research: Before you invest in a stock, mutual funds or anything else that has a potential for higher return, you need to do your research.
- Watch costs: While you’re investing money in different investment tools, you need to watch how much commission or fee you pay.
- Invest regularly: Even if you start investing with a small amount, you should keep investing regularly. Because it will add up over the years.
Now is the time to start investing.
6. They use cash.
Research shows that people tend to spend more when they make payments with credit or debit card. On the other hand, people who always have money use cash and therefore they spend less than people who pay with credit or debit cards.
So try to leave your cards at home most of the time. It’ll really help you to spend less. Because when you want to buy something, you’ll look into your wallet and see a limited amount of cash, and that’ll help you to think twice before buying. That means you’ll spend less and save more money.
7. They have multiple sources of income.
While most people rely on only one income, others have at least two sources of income.
Billionaire Warren Buffett, the chairman and CEO of Berkshire Hathaway, says that: “Never depend on single income. Make investment to create a second source.”
So try to look for ways to have multiple sources of income. There are plenty of opportunities to generate income. All you need is an idea and dedication.
If you don’t know how to find ways to generate multiple sources of income, the good news is that there are plenty of posts about making money inMake Moneysection to learn about ways to make extra money and grow your wealth.
8. They eat at home.
It is an undeniable fact that eating at home is cheaper than eating in a restaurant. People who are always good with money rarely go to a restaurant. Usually, they eat in a restaurant when they celebrate something.
What about you? How often do you eat in a restaurant? How much money are you spending for restaurant food?
Well, let’s take a look at how much the average American family spends a year each year on restaurant food.
The average American household spends about $3,600 a year dining out, according to the Bureau of Labor Statistics.
Do you think that there is no way you could spend that much?
Try to track your spendings and you’ll see the truth.
9. They know the difference between needs and wants.
Studies show that our spending decisions are influenced basically by our needs and wants. Let’s take a look at the difference between needs and wants. Needs are things that people require to survive. On the other hand, wants are things that people would like to have but are not needed for survival.
People who are good with money know how to distinguish and balance their needs and wants. They can easily manage their budget because they can prioritize their spending and avoid unnecessary wants that they don’t need.
If you want to manage your budget easily, you can ask these questions to yourself before buying something.
Do you need it, or do you want it? What if it’s not being bought right now? Will this make me a happier or healthier person? Am I OK without this?
So if you want to take control of your finances, don’t let your purchases control you. When deciding between what you want and what you need, remember these questions. Understanding the differences really will help you manage your budget and prioritize your spending.
10. They read everything about finance.
A great habit of people who always have money is that they read everything about finance. They have financial awareness because they always read books, magazines and articles about money management.
So you should never stop learning if you want to achieve your financial goals.
Are you ready to learn about money, budgeting, saving, and anything else about personal finance?
Then check out these additional resources from Money and Financial Literacy:
- Make Money
- Save Money
- Personal Finance
- Financial Literacy
11. They have different bank accounts.
Most people tend to keep their savings in a place that they can easily reach. However, people who always have money do not prefer to keep their savings in one place. Because having multiple accounts helps them to use these accounts for managing different savings goals.
So depending on your saving goals, you may find that having different bank accounts makes sense.
Final Thoughts
The bottom line is there is a lot of helpful advice out there on money habits. Find out what works for you. In this article, you have been introduced to 11 habits of people who always have money; keep these habits in mind. If you follow them, it’ll be much easier to manage money and live a better life.
It’s now time to put things together and begin to build your financial future!
