There is an old adage that says that money is incapable of buying happiness. While a big chunk of this cliché is full of wisdom, a part of it should be taken with a pinch of salt. Scientists love to take on challenges, and as per a Cambridge University research report, spending money on things that line up with your personality traits can make you truly happy. Apparently having enough money to spend in the right way brings increased inner satisfaction than purely having a satisfactory income.
At the heart of purposeful spending, however, lies the “B” word. If you dread budgeting time, it might comfort you to know that you not alone. A Gallup poll reports that in the U.S. for instance, it is only a paltry 32% or 1/3 of all households that have a running budget. At least half of all families as per the poll live from hand to mouth, paycheck to paycheck. Another 19% have nothing saved for a rainy day. Consequently, at least 49% of all adults are described as fearful or anxious about their level of financial wellbeing.
If a lack of proper financial budgeting can render half of a population anxious and stressful, then what does the other half do to live a more comfortable life? They have budget savvy habits. A budget is a key to financial wellness, and it works on large and small incomes alike. The fact is that it, not a matter of how much anyone earns but how intentional you are with your money. So, what habits can you imitate from the budget savvy and enhance your financial wellbeing?
They track their spending habits consistently
The thing about following your expenses is that it makes you very honest with yourself. It shows you clearly where you direct your money to and if it is meaningful. You can make time every evening, sit down, and record every purchase you have made on that day on a notebook or spreadsheet. All your credit card statements and receipts should be filed away for future reference.
Ensure that you have also listed down the description of your purchase and how much money you spent on it. If possible, state the reason why you had to pay for a particular item, especially if it outside your standard household purchase. Did you spend a few coins on bottled water? Why? If you go through the reason behind the purchase you might come to the conclusion that had you waited for a few more minutes, you could have had your water at home, for instance.
The most budget-savvy, however, use tracking apps like Mint, Wally, or Clarity Money. With an app on your phone, you can key these expenses in on the go, which eventually will lead you to a cash only budget kind of spending.
They minimize their credit card debt
In today's financial atmosphere, liability can be an asset of sorts. It can, for instance, help you purchase your first home while you are still vibrant and full of energy. Saving entirely for a home purchase can take decades. Through debt, you can also fast track the ownership of your first car. Such liability is beneficial, but most debt has a prohibitive price tag attached to it. One of the worst sources of debt is credit card debt. As an illustration, Britons have an accumulated credit card debt of £72.5bn. The average range of unpaid credit card for the U.K. household stands at £2,688.
The sad fact is that more households are increasingly becoming enslaved to high-interest and short term debt and it has become unmanageable. The problem with credit card debt is that it is money used on purchases that are unplanned and often times unnecessary, unlike the excellent debt type that pays off homes or cars. The budget savvy, therefore, works towards eliminating plastic money debt by keeping it as low as it can possibly be or consolidate into a bigger reasonable amount using bad credit realistic loans services to find an appropriate lender for the task. You can also take advantage of this high-interest debt by using your card to pay off all your bills then offsetting the credit card debt using your debit card.
They review their billing statements
That cell phone or internet connection bill may change every other time, and then small additions in charges can bloat your billing statements. It is imperative, therefore, to go through each invoice and see what new charges there are, hidden or not, you have accrued each month. Sometimes these charges are for additional services you do not need. You can, therefore, eliminate them and save some cash. If for example, you had a sports subscription, you can unsubscribe once it’s offseason.
They negotiate their bills
If there is a bill that seems unnaturally high, call the billing company for inquiries. Most companies have the ethos of customer retention, so they will do what they have to retain you. Many of them are therefore willing to sit with you and get you an appropriate bill if what you have is unreasonable.
Acquiring a new customer costs most businesses much more than retaining them, so expect a listening ear if you want to negotiate the size of your payments. Price reductions are a widespread occurrence when it comes to medical bills. Be tactful and aggressive at the same time, and the financial reward will be worth the hassle.
They use coupons for the purchase of necessities
Couponing they say is an art especially for large households that have to be run on very tight budgets. Most ardent couponers live by the words “never pay full price!” It is impossible to cut out spending in its entirety, but it is possible to keep an eye for coupons and discounts that make your everyday groceries more affordable. These items are usually listed on the dailies, websites or stores. Compare the prices on items on stores too and make use of coupon apps like Groupon, Flipp, or groceryIQ.
They do packed meals
One bad habit of poor spenders is the daily purchase of snacks because they are relatively inexpensive. However, if you are beginning to track your spending, you will realize that eventually, you have spent a small fortune on the purchase of snacks which are often times bad for your health. If you, however, decide to be thrifty and make all your meals, coffees or snacks at home, you will not only reward yourself with good health but will save some good cash too while at it.
By packing your meals also, you will also only eat as much as you want to through packing only the required food portions. David L. Bach, the author of the Finish Rich Book Series, calls this habit the “latte factor,” whereby money is saved through the elimination of small purchases that often add up.
They pay themselves first
Paying yourself first does not imply buying yourself a pair of Jimmy Choos but saving. Yes, not as, but it is vital to have an automatic contribution made to your employer's retirement plan as an example. Ensure that from your very first job, you have maxed out all your yearly retirement money contributions. The fact is as you advance in life, expenses towards, the family are going to increase, so you have to start saving as early as possible. Be a savvy investor too. Using websites like Acorns, you invest a little of your savings for higher returns than you would achieve with a savings account.
They take free money
If perhaps what you make is not much and you, therefore, cannot max out your retirement plan contribution, invest enough then to receive your employer's match. Ask your company's administration if they have that opportunity available and contribute the required amount to enjoy it.
They save for when life happens
In the U.K., only about two-thirds of adults in the 35 to 44–age bracket have £100 stashed away for a rainy day. Without at least three to six months worth of living expense saved up, you are likely to be crippled financially, when the unexpected happens.
With ample savings, however, you can take the time out to deal with problems without turning your households’ finances upside down. It is not possible to save overnight, but with discipline and automatic contributions, it can be done with time
By teaching in yourself budget savvy habits, you will also avoid lifestyle creep that can ruin your financial wellbeing as your financial situation improves. Such practices will ensure that you do not begin to spend more on frivolities and keep you on the straight and narrow, financially.