Everyone in my circle of friends is gearing up for the holidays and going crazy with the offers and promos in the market. While I do want to take advantage of the offers and light up everytime I hear or read the word “SALE”, I need to take a pause each and everytime to re-evaluate if 1) we can really afford it, without having to apply for payday loans every month 2) will it not affect our long-term financial goals. Unfortunately, I always end up saying no to the crazy low offers but I know in the end I will thank myself for controlling where all our hard-earned money goes to.
Here are some financial truths everyone must know:
From DumbLittleMan.com.
1. Nobody cares as much about your money as you do.
Take care of your money and do not just turn it over an investment manager.
2. Spend less than you earn.
This one seems pretty obvious but for a lot of people it’s simply not happening. The only way you are going to get out of debt or make advancement on your savings is to spend less than you earn. That’s really all it boils down to.
3. Using cash when you can is best.
There is something about handing over physical cash that is a tad more painful than handing over a plastic card. If you have $20 to spend on entertainment this week you’ll likely think twice about spending $15 on movie rentals Monday evening when you know you’ve already made plans for Friday. Using credit is a slippery slope. You don’t see a running total and $8 here and $20 there doesn’t seem like a lot but after 30 days those small purchases can add up to a lot.
4. You need to pay yourself first.
This doesn’t mean give yourself money to go out and buy a new sweater or jacket or new a computer or phone. What this means is that before anything else (bills, groceries, gas etc…) you put an amount of money away into savings. Initially this may be a very small amount and that’s OK; it’s something! When you can, increase the amount you’re saving to 10%, 15%, 20% or more of your income. By doing this you are consistently making progress on your goals even though there may be something a lot more fun you could do with that money.
5. Budget budget budget.
Yes it’s the dreaded B-word. Budgeting doesn’t need to be difficult but it does need to be realistic. A budget that doesn’t accurately reflect your spending habits and expenses won’t be a useful tool at all to get you closer to realizing your financial goals. A budget will help you to see at a glance where your money is going and where you can possibly reduce spending to improve your financial situation.
6. Wants are not the same as needs.
In reality there are very few things we really need. For the majority of people, once adequate food, shelter and clothing are provided almost everything else classifies as a want. You may think you need cable TV or a cell phone or a car but there are several people who manage to get by everyday without any of these things.
