Money management is the single best way for us to create the future we want for ourselves. You can invest with the best of them, have a great paycheck, and still not end up with what we want from our financial future. This often comes from a lack of solid money management. We don’t keep track, we overspend and underestimate...there are a variety of missteps that lead to financial trouble.
In the new year, we like to make resolutions. Big promises and goals don’t usually pan out, but small adjustments make it that much easier to stay on the right track.
Here are our top tips for building your wealth through small money management adjustments in 2020.
Minor Changes That Improve Your Finances in Major Ways
Stop Incurring Recurring Bills
We live in a world that increasingly demands our subscription to services versus one-time payments. Sure, we’re all familiar with the recurring phone, internet, and utility bills. They’re common. However, we’re seeing a surge in subscription services from snack boxes and sock boxes (and any subscription box, honestly) to streaming services and free shipping.
Be sure to check out: How to Save Money to Purchase an Investment Property
As much as you can, cut down on these recurring bills. Take out the non-essentials. Because when you have five subscriptions that cost $20 each, that’s $100 that could be in your pocket — or in savings — each month.
Price shopping is one of the oldest tricks in the book, but it is also effective. Whenever you shop, compare prices. Begin to develop a sense of what costs less where and shop accordingly. Before making big purchases especially, shop around. You can find cheaper (and just as good) products that are used or refurbished for a fraction of the cost.
Before you impulse buy, take out your phone and search the item online. You may find it for less from a different retailer. Regardless of what you’re looking for, make a habit of price comparing.
Hot tip — use the Honey app on your phone and computer when online shopping. It will automatically enter and test all available coupons for that site and choose the one that offers the most savings.
We live in a culture that values instant gratification. Because of that, we have an unprecedented level of credit debt. To combat this and avoid more bills and interest each month, save up for your big purchases. You may have to wait longer, but you can have the satisfaction of really owning that new flatscreen or furniture set.
Saving and then spending versus giving in to the lure of instant gratification will save you a lot of money in the long run.
Improve Your Credit Score
Credit is necessary to make big purchases — real estate investors particularly know how serious you have to take a credit score if you want to buy lots of properties. It also benefits us in that a high credit score can impact how much you are charged in interest when applying for new credit or when your plan is reviewed. How do you get a good credit score?
The best and easiest way is to pay your bills on time and in full.
Track Bills and Spending
We harp on the need for a budget, which tells you that it is important. Because we’re well past the days of manually balancing checkbooks, it’s easier than ever to ignore the state of our accounts. There is a multitude of money management apps you can get on your smartphone — apps that will not only allow you to see transactions and balances but will break down your spending habits and offer advice. There are apps that show how much you spend on subscriptions and help you cut back. Utilize these tools!
Look at your balance before you spend rather than after. It will help you gauge how “worth it” the item really is.
Visualize Opportunity Cost
There’s an old visualization trick that enormously helps cut down on unnecessary spending. It’s easy and takes only a few seconds of thought. When looking to make a purchase, hold that thing in your hand. Consider how much it costs, then, weigh your options. Would you rather have this thing or would you rather have what it’s worth in cash in your hand?
It will help you quickly evaluate the necessity and value of the things you want to buy.
Get your financial house in order. Call your REI Nation adviser today!