Advertising
Advertising

6 Ways to Be More Prudent and More Financially Stable

6 Ways to Be More Prudent and More Financially Stable

We are taught to manage our finances while we are still kids. Our parents give us an allowance and see how we distribute our money throughout the month or week. Then when we move out during our studies, we have to pay bills and buy food so managing finances becomes a bit more difficult. Then we start to live in a home of our own, where there are all sorts of other bills and repairs to worry about, so staying within your budget becomes even more difficult.

If we are not careful, we can easily end up having money problems and this can lead to a very stressful life in the future. Furthermore, we live in a time of consumerism, so a lot of people out there are trying to sell you things you don’t even need, but they are making compelling cases so that you end up becoming a customer. Due to these reasons, managing finances becomes more challenging, so here are some tips that can help you become more frugal.

Plan out how much you are allowed to spend

Alright, one of the most basic mistakes one can make when handling salary, is to adopt a “go with the flow” point of view. When you get your paycheck, it would be wise to have some sort of basic budget plan i.e. a rough estimate of how much you can spend on a daily basis, so that you can go through an entire month living fairly comfortably.

Once you have that, you should by no means spend the entire daily budget, since you are bound to face unexpected expenses and you’ll need an emergency fund. Also, this daily budget is a good starting point for future financial strategies. You’ll need to find different ways of increasing your daily limit and challenging yourself to save more.

Do not be financially dependent on other people

Of course, if you are going through a bad financial patch, chances are you will borrow money from friends or family. However, you should not allow this to become a habit. Being financially dependent on other people makes you one step closer to financial suicide.

Advertising

Truth be told, you might not borrow much and your close friends or family won’t mind you borrowing some money, but this is more of a personal issue. If you constantly need to depend on other people, then you have a problem that has a rather simple solution. You can either spend less or find a way to earn more.

We live in a world where earning a bit extra cash is really not that hard, it’s simply tedious. You can complete surveys or install apps that you can use to earn money online and then can cash-in later. If you continue to rely on others from one month to another, it will only send a message that you refuse to solve your problems and this can leave severe consequences in the future.

Do thorough research before important decisions

It is important that you do not make any big investments without thorough research. You can visit different types of agencies and speak to different financial advisors, but bear in mind, that these people can have a vested interest when they tell you what to do. If the advice is not coming from a close friend or a family member who genuinely cares for you and who is well-versed in money management, don’t immediately adhere to it.

You can do online research and find more accurate information this way. Of course, the people who tell you how to handle your finances are also online and will probably advise you the same thing there, but there is a difference. Google has its own base of trusted websites, and there are always ways to check if sites are trustworthy. Here are some explanations on how to do it, but you can find even more online.

These big decisions are usually loans and these loans are sometimes a necessity, because it is unrealistic to expect that you can simply pay for an entire house with cash. So, at one point you might need to get a house mortgage. When someone explains to you how this whole process works and you feel that the explanation is oversimplified, then chances are that, the person has a vested interest in your investment.

Advertising

It’s important that you are vigilant and that you explore all of the other options before you go through with this type of decision. Here is a good guide that can help you gain a deeper understanding of mortgage rates; make sure you go through it if you plan to buy a new home, or if you want to be a real estate investor.

Another important thing to remember is not to turn to the payday loan industry. These are also known as predatory loans, because their interest rates are ridiculously high. They only offer a quick solution, but everyone ends up regretting their decision due to the astronomical interest rates.

In other words, if you really need a loan and intend to pay it back, then it’s far better to borrow from friends or family. People usually end up borrowing money from others, or pawn their possessions in order to return payday loans and they could have done those things in the first place instead of taking that loan.

Use money management tools

I have already mentioned how you can use apps to earn money, but you can also use apps to save money. There are apps that can calculate your expenses and give you good financial advice, but it’s always better to seek a financial advisor you can trust. However, there are apps which can help you get coupons or discounts in stores.

They will also provide you with insight into which stores currently have discounts, sales etc. These are really useful and with a good shopping strategy you can save a lot of money. It’s also important to know that some of these quality apps come at a price, so you should only buy them if you absolutely need them.

Advertising

In other words, if you are already having a hard time managing your resources and have debts, then these apps won’t do much good; they will only be an additional expense. On the other hand, if you want to create a good savings strategy, then buying them is a good idea, since they will eventually pay for themselves.

Use saving tactics

When it comes to saving money, there are so many viable tactics out there that you would be surprised. In this section I will only list some that I really like, but as mentioned you can find a lot more online.

  • Weekly challenge: Basically you set the amount of money you wish to put aside each week (it can be $1, $5, or $10). Then at the end of the week you put that amount in a piggy bank or a savings jar, but at the end of next week, the amount needs to be doubled and so on.

So, if you go for $5 then, next week you place $10, and a week after that is $20, and the last             week of the month is $40. You reset the amount at the beginning of the next month. Also it             might be better to place the money in the jar at the beginning of the week, so that you know             you cannot count on it.

  • Wait for a discount on general goods, like cleaning products, toilet paper, toothpaste etc. Then feel free to buy these goods in bulk and you won’t have to spend money on them in the near future.
  • If you need new furniture, check out sites like freecycle.org to see what you can get free of charge.
  • Instead of buying cleaning rags, you can save your old clothes that are no longer wearable, and use them to clean floors.
  • Before you go shopping, write a list and stick to it; don’t be tempted to buy anything you don’t need. In any store, the most essential items are usually in the back, so that shoppers are tempted by expensive products they do not need while they are walking to the back of the store to buy what they came for.
  • Learn how to repair clothes so you won’t have to toss it away at the first signs of wear and tear and you can also earn some extra cash if you monetize these skills.
  • Buy light bulbs that do not use as much energy as regular light bulbs, they last longer and even though they are expensive, they will pay for themselves and save you money.

Once you manage to accumulate a fine amount of resources with these saving tactics you can invest in things like solar panels and a tankless water heater, since these will also save you money in the long run. Moreover, in case you want to discover more saving tactics, you can use websites like thesimpledollar.com, and you can find some good tips in this article as well.

If you go through the links, you’ll find out that if you choose to live healthier you’ll also save a lot of money. We all spend too much on food and if you learn how to prepare it yourself, you will eat better and spend less.

Advertising

Furthermore, if you buy bottled water, you should stop and buy a filter for tap water; this way you can drink tap water and you won’t have to buy it from the store. Also, if you carpool with your colleagues from work, you save the environment and money that would go on gas. In other words, we spend a lot just to have a bit more convenience and we don’t really need to sacrifice much to save quite a  bit of money.

Eliminate minor but unnecessary expenses

Finally, you must never forget that we live in a world that is dominated by micro transactions. These are really tricky, since you can’t argue that someone is trying scam you and we have almost no issue with small fees, so we part from our money lightly.

However, one small subscription after another and you start to lose a significant amount of cash, and you barely notice it. These small subscriptions are very often for a magazine, for account maintenance, for private network channels or cable channels etc.

In reality we  rarely use these services, mostly when we are bored and quite frankly there are other ways to be entertained. It only seems cheap and convenient with these subscriptions, but in the long run, we end up regretting the decision when we find out just how much we could have saved. The point is, you should not fall for micro transactions for products you won’t use frequently.

As you can see, being more prudent is not that hard. All it takes is some effort and minor life changes, but there are long-term benefits for those willing to apply them. Make sure you go through the links in this article, as they can tell you how to save and how to think before investing, and they can also help you earn a bit extra.

Remember to operate within the borders of your daily budgetnand to invest in items that can help you save more money in the future. If you manage to do this, you should be just fine.

More by this author

Djordje Todorovic

Blogger, Gamer Extraordinaire

20 Things Smart People Don’t Do (And What They Do Instead) 5 Tips on How to be a More Responsible Person 7 Essential Tools Every Serious Startup Needs 7 Common Struggles of Minimalist Beginners and How to Overcome Them 4 Shortcuts to Self Improvement for Tech Junkies and Nerds

Trending in Budget Activity

1 6 Easy Ways to Treat Yourself 2 7 Websites to Sell Used Stuff Profitably 3 Seven Tips to Save Money While Renovating Your Home 4 4 Ways to Make Every Penny Stretch in 2017 5 Getting Out of Debt in 4 Simple Steps

Read Next

Advertising
Advertising

Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

Advertising

So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

Advertising

Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

Advertising

You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

Advertising

Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

Read Next