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5 Budgeting Tips That You Should Never Miss

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5 Budgeting Tips That You Should Never Miss

Who doesn’t want to feel more comfortable, less stressed out and be able to afford occasional luxuries, like travel, gadgets or some nice clothes?

Your finances can impact all areas of life, and can even put an unnecessary strain on your love life, so it is a good idea to learn a few useful things about effective budgeting. Living within one’s means isn’t all that difficult, nor does it require huge sacrifices – you just need to be realistic, ambitious and motivated to make some positive changes. Let’s look at some practical examples of things you can do to put a rein on your finances and start being more strategic with your spending.

1. Focus on prevention rather than the cure when it comes to maintenance costs

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Car broke down

    You see people do this with their health, their home and their car – they neglect regular maintenance and make do, until the moment something goes terribly wrong and they are forced to remedy the problem quickly. The problem here is that if you allow a small problem to grow out of control, you can end up spending a whole lot of money trying to fix it.

    Let’s say your car is chugging along just fine, but you’re not the first owner and have had it for a while. You may notice small problems creeping in if you just do some regular car maintenance, like replacing worn down parts, changing the oil and having a general checkup from time to time. These principles can be applied to any aspect of life – regular maintenance is a huge money-saver in the long run.

    2. Make sure to pay yourself for all the hard work you do

    Sometimes finding a bit of extra money in your budget that you can stash away is just a matter of perspective. Don’t see it as taking some money away from a salary that already has to cover plenty of expenses, think of it as paying yourself for the amazing job you do every single day. As financially savvy people have pointed out before, establishing that your comfort and financial security are a priority makes it easier to justify saving a decent part of your total income.

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    It can be as simple as taking about 5% of your income off the top as soon as you get your paycheck and putting it in a savings account. You can make such payments automatic, which is easier than always trying to resist temptations, and you can slowly increase the amount you set aside as you get more experienced with managing your budget.

    3. When you need something done, do it yourself

    Home repairs

      While certain goods and services are fairly complex and well beyond our own skill level, with many things paying top dollar is more about convenience than anything else. If you buy in bulk, look for sales and cook your own food you can save a substantial amount of money, but it will require some effort on your part.

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      In the same vein, if you devote some of your time and energy towards developing some basic DIY skills, you can take a few fairly inexpensive supplies and make whatever you need. Taking the time to learn how to do some basic repairs yourself is also a good idea. Creating a small monthly DIY budget allows you to stock up on supplies and tools needed for all the crafting and repairs you’ll be doing.

      4. Keep your monthly budget flexible and you won’t break the bank

      Now, as far as your income, in a majority of cases it stays the same throughout the year or is at least fairly consistent. This means that you either have to make some more on the side or rearrange your finances from month to month to face new challenges or afford certain luxuries without having to dip into your emergency fund or stall your savings.

      The simplest way of going about it is to do some budget fine tuning – e.g. if you want to buy a new TV or a fancy pair of shoes, you may have to eat out a couple of times less. Some expenses pop up every two or three months and some are seasonal, so you will have to divert funds from other areas during those periods.  The story of John Steinert, a man in his mid-twenties who is just about to pay off all his student loans and is on a good track to retiring before sixty, shows that you can manage to live comfortably while saving, just as long as you have a good plan and keep things flexible.

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      5. Expect the unexpected costs

      Injured Piggy Bank WIth Crutches

        Last, but certainly not the least, you have to have some kind of buffer, which allows you cover unexpected costs without needing to take out a loan or raid your primary savings account. As we already noted, regular maintenance costs should be covered by your monthly budget – e.g. problems with your car’s engine or a serious case of mold in the attic fall under maintenance costs as they are something you should expect to deal with from time to time.

        Unexpected costs include things like a long hospital stay due to injury, a friend announcing that he or she is getting married out of the bloom, theft, your phone falling down a flight of stairs and breaking, etc. Chances of things like this happening are not that high, but there are plenty of little things that can go horribly wrong, and you need an emergency fund separate from your main savings account to help you deal with these problems as painlessly as possible.

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        Applying these tips in your day-to-day life will help you cover the broad strokes of your financial planning, but it is ultimately up to you to set priorities and fine tune your budget. With a bit of luck, you’ll be well on your way to achieving financial stability in the next couple of years.

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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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        Published on November 8, 2021

        How To Achieve Financial Freedom With the Right Mindset

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        How To Achieve Financial Freedom With the Right Mindset

        What would being financially free mean to you? Have you made the mistake of thinking that financial freedom requires millions of dollars and decades of hard work? When it comes to our relationship to money, the answers really lie in our mindset. Change your mindset around money and your entire financial outlook will change with it.

        And no: we’re not talking about putting a check for a million dollars under your pillow at night. This is about you becoming a financially free person, in whatever capacity you choose. And that’s really the key: it needs to be defined by you. So many people outsource this responsibility to society/celebrities/the government etc… and as a result never achieve it.

        What if you could identify what financial freedom looks like for you, realize that it is possible to get there in a matter of a few months and then build a road map to do just that?

        Read on, because that’s what we’re going to open you up to. This isn’t about giving you specific strategies “guaranteed to work in five minutes or your money back…blah blah.” This is about awakening you to just how powerful you are, where your blocks lie and how to smash through them effectively.

        Financial Freedom – What is it?

        Well like I said: I’m not going to define this for you. That misses the whole point of this article, but let’s lay out some ideas to get you started.

        Typically, when we talk about financial freedom in the west, we really mean: freedom from needing to work, in order to meet financial obligations. We know that there has been a rise in depression amongst nine-to-fivers, 62% as a matter of fact between 2019 and 2020 in the USA.[1] It’s therefore no wonder that there has been correlative uptick in the search for alternative solutions to finances.

        This depression is largely as a result of feeling trapped, unable to realize potential and being denied opportunity. It is also likely that, thanks to a more global world and social media: we see just how abundant life can be for some; like a carrot dangled tantalisingly close, but just out of reach. We yearn for more meaning in our lives, more excitement and to be able to live on our terms.

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        Finances are (as we see it) the stumbling block and the preserve of the chosen few…not us.

        So to start building an accurate picture of what financial freedom would be for you, begin with what your life would look like if you didn’t have to worry about money. How would you feel if you didn’t have to consider your monthly budget, when putting your hand in your pocket to pay for lunch?

        The point is that a lot of the stress and resulting depression that comes from feeling like a ‘wage-slave’ is down to our lack of clarity on what we actually want. We get caught, focussing on what we lack and that perpetuates a mindset of lack that very quickly is reflected in our reality. We are allowing our subconscious, emotional mind to be bombarded with imagery every day that reenforces a sense that we aren’t good enough. That we do not have what it takes.

        That wouldn’t happen though if we had done the work of pinning down exactly what we wanted in the first place.

        Does Financial Freedom Come at Extreme Levels of Net Worth?

        There is a tendency, thanks again largely to how we are conditioned through media, to think that financial freedom only comes at extreme levels of net worth. What if I told you that is completely ill-founded and untrue?

        Using the standard/assumed definition of financial freedom for a moment; this means that you need enough capital to generate a return that is greater than, or equal to your monthly expenditure. That doesn’t necessarily tell the full picture, but nevertheless; it’s is a good place to start.

        If your monthly outgoings (mortgage, bills etc…) come to $3,000 for argument’s sake, you can achieve that with as little as $108,000 invested over three years.[2]

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        Hardly the millions you had probably envisioned is it?

        Remember: we’re not talking about you living a lavish lifestyle necessarily. If that is what you want; fantastic, it’s certainly achievable, but what we’re getting at here is your ability to meet all of your financial obligations without having to work.

        I’m sure you’re unlikely to find $108,000 down the back of your couch, but it is a figure that is well within reach of most working adults. A $36,000 salary opens you up to borrowing that kind of money, and even if you have to continue working in the short term in order to service the debt and keep up with your bills; you’ll have a clear end goal in sight.

        And you’ll have doubled your income in the meantime, for the same amount of work!

        How To Achieve Financial Freedom With the Right Mindset

        As we touched on earlier, coming at your life from a space of ‘lack’ simply perpetuates more of the same. As I always say: your environment doesn’t lie. Look around you, if you’re dissatisfied with any aspect of your life, you first need to accept responsibility for it. If you don’t, you’re abdicating your power to make new choices.

        You may well have been the victim of circumstance in the past, but how you respond and what you do with that experience is up to you. If you choose to look for the positive, however minor it might be in any given situation – your experience of life will begin to change.

        This is, in essence, what The Law of Attraction is all about. What lies behind it is your reticular activating system (RAS). The part of your brain designed to filter out the (as it sees it) unless information, highlight the important information and prioritize your safety. Thanks to it being part of your primeval/‘lizard’ brain however, it predates the conscious mind, intellect and reason.

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        The issue for a lot of us is that we haven’t understood how to communicate in a way that our RAS understands. We can’t translate our conscious desires and are therefore caught in a loop between two incongruous forces.

        Our subconscious wants us to be alive and it bases its criteria for this, largely on the principal of: same = safe. Meanwhile, your quality of life, passive income, work/life balance etc… are inconsequential. That part of your mind doesn’t give a hoot about the utility bill or being able to afford a holiday.

        It is perfectly possible to show you subconscious/RAS the benefits of financial freedom though, or indeed any other outcome you’d like to see in your life. You just have to speak its language. Becoming debt free and financially free is actually one of the easiest things you can communicate to your subconscious, because you have so much ‘real-world’ experience with money.

        Here’s how:

        1. Start by clearing your mind and being present – find a meditation, visualization or breathing exercise that calms your mind, allows you to focus on the present moment and become an observer of your surroundings. The point of this is to stop all of those thoughts buzzing around in your head that are pulling you back to the past, or projecting you into an imagined future.
        2. Then build a mental movie or slideshow of what your average day would look like, were you to achieve financial freedom. We’re not talking about big occasions, huge wins or events; just an average day.
        3. From your position of present observer – start to observe the feelings that arise as you go about this average day in your new life. Do you feel your shoulders relax and drop? Have you got excited ‘butterflies’ in your stomach? Are you smiling more?

        Learn to recall these feelings at will – this will connect the dots for your RAS and you will soon start noticing a shift. Think of it as connecting with your desired future and pulling it into/towards your present.

        Bonus Hack – Practice Gratitude

        We’ve already discussed how you can start attracting/observing the opportunities that will enable you to achieve financial freedom. This involves a lot of work in order to finesse, but the principals are easy enough to understand. Something that we can all do, no matter what we’re trying to achieve, is practice gratitude.

        Using the same principals that I’ve outlined above: something of a ‘catch-all’ that we can train our minds to produce more of, is gratitude. If we can shift our mindset so that the next time some negative, external and unforeseen event occurs, we are still able to be grateful for it; your entire experience will shift.

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        Not only will you observe more to be grateful for all around you on a daily basis, but you will shift out of a mindset of ‘lack’. All of the barriers that stood in your way before (not enough capital, stuck in a job I hate etc…) they will shift to becoming things that support your desires and goals.

        For example:

        The job you hate, when reframed as the means to support a transitional stage of your life (i.e. enabling you to borrow money to invest) suddenly gives you a resource to be grateful for.

        The added beauty of this is that your RAS doesn’t know the difference between a big win and a small win. You being truly, deeply grateful for your socks (for example) carries the same weight as being grateful for your health, or your spouse. This is why I say “practice” gratitude. You can start whenever you want!

        Look around you right now and find something that you really are grateful for, no matter how small and seemingly inconsequential.

        Practicing this will create a snowball effect. Much quicker than you might think: you’ll be overwhelmed with gratitude for your life and all that’s in it.

        In Summary

        Financial freedom is more within your reach than you probably think or feel. Understand that the limits you’re assuming to be there are largely a product of your subconscious mind, having been drip-fed evidence of that over the course of your lifetime. Changing that might take a lot of effort in the short-term, like cranking over an old car, but the effects will begin to build up quickly and self-perpetuate.

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        Apply this mindset to your financial situation and you will find that it too will begin to ‘snowball’. Financial freedom is closer than you think, so start looking for it today!

        Featured photo credit: Pepi Stojanovski via unsplash.com

        Reference

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