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The Art of Smart Spending: 7 Basic Steps to Financial Freedom

The Art of Smart Spending: 7 Basic Steps to Financial Freedom

Modern life has its fair share of stresses and pressures and the fast life we lead tends to put a strain on us. Life can have a lot of sources of stress, but one of the things that can really impact all aspects of your life is having financial problems. This is especially problematic for young people who have just started to earn their own paycheck and still don’t have control over their spending habits.

If you are having difficulty stretching your budget till the end of the month, you might find these tips helpful. We are going to give you basic advice so that you can apply and create some financial breathing space for yourself. It is amazing what you can accomplish when you remove stressing out about money from your daily routine.

1. Track your spending

First thing’s first, you need to know exactly how and what you spend your money on. Most of us develop a lot of, let’s say hedonistic and impulsive spending habits. In most cases these individual purchases are not a big deal, but they tend to rack up to a substantial amount. By analysing your spending, you will be able to identify unnecessary expenses and neutralize them.

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You can use your smartphone or tablet to write down your purchases and make it easy to keep track of your spending. Once you go through one month of tracking your spending, categorize your expenses and pinpoint those that you consider to be excessive and damaging to your monthly budget.

2. Manage your bills right away

One of the biggest financial complications that you can create for yourself on a monthly basis is to miscalculate your spending capabilities, go on a shopping spree and then end up not having enough money to resolve your bills.

This is why it is a good practice to avoid spending money before your manage your bills and actually have an idea how much money you can spend without going over your monthly budget. Keep in mind that not managing your bills properly will transfer into the next month and can create long-term trouble.

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3. Play mind games with yourself

    One of the basic approaches you can take is to actually convince yourself that you are outright broke. Whenever that little voice inside your head goes: “You’ve had a hard day, you should treat yourself”; add a big voice that goes: “You are as poor as they come, start meditating for stress relief.”

    This may seem as a bit harsh, but it is necessary and you need to work on your self-control. Once we start earning our own money, we tend to start spoiling ourselves and the mentality that it’s our money and that we can do whatever we want with it is all well and good until debts come knocking.

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    4. Getting things done with a bad credit score

    Usually, being under financial strain means that you also have a bad credit score. This can create problems for you when you want to take care of something that you sorely need, but your options are limited due to your inability to get a bank loan. In some cases, there are banks that specialize in giving credit to people who others consider incapable of taking up credit.

    Sometimes they specialize in a particular type of credit, but you’ll need to be very careful when you do this, since there are both good and bad sides to this, and since you are taking up more financial obligations in an already strain situation, you want to make sure that the good outweighs the bad. Furthermore, if you take the time to get your self-control, well, under control you’ll be able to improve your credit score, just be sure to avoid drastic measures that can hurt you in the long run,like payday loans and similar offers.

    5. Change can be a lifesaver

    Ok, so you went to work, took a stroll through town, got some coffee and finally got home. Now, pull out a jar, a bowl or something and drop all that change that you have left into it. Most cynics are probably going “Yeah right, some loose change is going to save my budget”, but you’d be amazed at how much money you can save like this. Furthermore, you are not strictly relying on change to save you, it is a cumulative effect and every little bit counts.

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    6. Tax deduction is an art

      It is a bit difficult to address this money saving option because the benefits and laws vary from country to country, but there are always ways to pay less taxes and save money. This requires extensive research and complicates your paperwork a bit, but once you get past these initial difficulties the amount of money you save is well worth the effort. Charitable donations are a good example of doing something good and getting a tax deduction, but there are many more options out there.

      7. Forgetting about extra cash to boost your savings

      If you get a raise, pay off a loan or get some other influx into your budget, you might want to keep “paying” for it a bit longer. Think about it, the habit is already there and all you need to do is transfer that extra cash into your savings account. This is probably the easiest way to build up your credit score and boost your savings account without really having to change anything. You’ll still need that cash influx though.

      Don’t let things spiral out of control, act fast and get things in order before things become too much for you to handle by yourself. It might sound stupid, but the bigger your debt, the faster it grows. It’s far better to tighten up your belt and take a couple of months to get things in order than to constantly stress about being in the red.

      Featured photo credit: https://www.pexels.com/u/paul-kunitsky-12238/ via pexels.com

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      Ivan Dimitrijevic

      Ivan is the CEO and founder of a digital marketing company. He has years of experiences in team management, entrepreneurship and productivity.

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      Last Updated on January 21, 2020

      How to Develop a Millionaire Mindset in 6 Simple Steps

      How to Develop a Millionaire Mindset in 6 Simple Steps

      We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

      It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

      How do you go about developing that millionaire mindset? By following these simple steps:

      1. Focus On What You Want – And Take It!

      So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

      Millionaires play to win, not to avoid defeat.

      This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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      2. Become Goal-Orientated

      It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

      Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

      Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

      Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

      You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

      If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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      If you are to become a millionaire, you need to start accumulating money.

      Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

      3. Don’t Spend Your Money – Invest It

      The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

      Stop working for your money and make your money work for you.

      Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

      There’s not just the stock market — there’s also property, and your own education.

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      4. Never Stop Learning

      The best thing you can invest in is yourself.

      Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

      Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

      Learn everything you can about how economics works, how the stocks markets work, how they trend.

      Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

      Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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      5. Think Big

      While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

      There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

      Aim for the stars, if you fail you’ll still be over the moon.

      6. Enjoy the Attention

      To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

      Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

      If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

      Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

      More About Thinking Smart

      Featured photo credit: Austin Distel via unsplash.com

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