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10 Financial Decisions You Should Stop Putting Off

10 Financial Decisions You Should Stop Putting Off

It is never too late to start taking care of your financial needs, if you recognize that you need a well developed financial plan to meet your current and future financial needs. If you are still unsure where to start and what decisions to make, here is a list of top 10 financial decisions you shouldn’t be putting off to kick start a better a financial future for yourself.

Start early

If your finances are not on track and take time to really think about them and start now. Now is the best time for you to start building a secure financial future even if you are too old to save much.

Stop relying on your single income

Find new avenues to increase your income. If you are relying on just one income, be on an active lookout for developing a second stream of income. You can do part-time jobs, online work , work from home, sell on ebay and Gumtree but start looking for new and innovative means of increasing your income. Higher level of income can help you to not only achieve mental comfort but it will also help you pay off your debts easily or save more.

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Start building an emergency fund

Do this by making regular contributions to the saving accounts offering you best returns. A basic rule of thumb is having savings at least equal to 3 to six months of salary but it can vary depending upon your circumstances, family size and income level. A good way to trash your savings is to save it into money market funds. If you are living in UK, you have a really nice way of saving your emergency funds in tax-sheltered individual saving accounts or ISAs as they are normally called.

Automate your finances

This will help you develop the habit of saving automatically as well as help you pay off your bills and debts online. Remember, there is always a choice to automate savings or debts. A better way is to automate your savings and expenses rather than debts because if you automate debts, you may end up not having enough cash flows in the end to fund your other expenses.

Decide about timing and location of your retirement

Start saving for your retirement now because if you start now (if you are not in your 40s already) time will be on your side and with compounding impacts, your retirement savings can easily reach your target level once you reach the age of your retirement. If you are young and starting your career, look for investing into IRAs and 401(K) if you are employed. Sooner you start saving for your retirement, a bigger saving pot you will have in the end. With cost of medical care increasing, chances are that most of your savings will go to your healthcare so save enough so that you can really enjoy your retirement savings.

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Develop a plan to pay off your debt and stick with it

There are different methods to start prioritizing your debts and paying off. Snowball method suggests paying of smaller debt first whereas another technique of paying off your high interest rate loan first is also often recommended. However, debt also has an emotional drain on all of us so you can start to prioritize debt on the basis of their emotional intensity rather than their cost.

Have a life insurance policy in place

In the case of an emergency it can help your family to actually get some financial cover. There are lots of insurance policies ranging from covering damage to your appliance to your life but put off all insurance decisions but one of having a life insurance policy in place. Having a right amount of life insurance however, can vary depending upon your individual circumstances but focus at least on having a sum assured at least equal to 3 years of your current salary.
< h2>Start to save for your down-payment of your dream home

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Paying as much as you can in down-payment can reduce your monthly mortgage payments as well as interest rates. If you are planning to buy your home now with no or very little down-payment in savings, it is better to rent rather than buy.

If you are considering buying your own home, you may have to recheck whether you should buy or rent

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If costs associated with buying such as interest rates, repairs, taxes etc are greater than what you can afford, it is better to rent rather than buy.

Start to build your credit history

It can help you get good rates when you finally decide to buy your own home. Credit cards can be a great way to develop your credit score provided you don’t mess with them. Use credit cards to develop your credit history rather than as a tool to buy things which can depreciate in value quickly.

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Personal finances can easily be managed provided we take right decisions at the right time. When in doubt, always seek advice and focus more on things which can help you save more. One final word! Start now to track your expenses not to know where your money goes but to know how you can discipline yourself by cutting some of the unnecessary expenses.

Image Credits :

Featured photo credit: Morgue via cdn.morguefile.com

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Adnan Manzoor

Data Analyst & Life Coach

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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.

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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.

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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.

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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.

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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

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