Thanks to modern technology, it has become all too easy to spend money. We can use our debit and credit cards to pay POS machines anywhere, anytime, and now we can even pay remotely with apps and online payment platforms. This may make things easier, but it also makes the temptation to spend stronger than ever, which can put you in financial trouble.
This makes having financial management skills to balance your budget and protect your wealth more important than ever before. In this article, we’ll share some top tips and tricks to improving your financial management skills. These skills will help you to avoid getting into debt, and instead, let you build up a healthy savings account or an impressive investment portfolio.
Commit to Saving Money
While most people talk a lot about saving money, many of them fail to do so in practice. One of the most common reasons for this failure is a lack of discipline or willpower. That being said, it is not easy to save money. This may require a significant shift in your habits, and it is important to acknowledge this, just as it is essential that you commit to doing what’s necessary to save money.
This doesn’t have to be intimidating if you break it down into smaller steps. For example, start by putting aside an extra £100 a month, and once you reach this goal, aim for a bigger number, say £200. Keep doing this until you reach your monthly savings goal.
Start Thinking Like an Investor
In today’s consumerist society, we often end up buying a lot of things which we don’t really need in our life. A better approach is to start thinking like an investor. Yes, this might sound a bit extreme but it will help you avoid wasting thousands of pounds on unnecessary items every year.
Thinking like an investor means critically assessing each purchase before you decide to make it, and considering whether it makes a good investment. This due diligence could save you a lot of money which will go into your savings or wise investments, rather than stuff you don’t need. Doing this will also help you to improve your overall decision-making skills, which you can apply to all parts of your life.
Learn to Plan Your Spending
Impulse buying and reckless spending are some of the biggest mistakes you can make when it comes to financial management. Instead, you should carefully plan your spending to make sure that every purchase you make is responsible and fits in your budget.
If you carefully plan your spending, then you will be better prepared to face tough times when you may need funds to deal with emergencies or other unexpected events. If you don’t this, then you risk falling into debt traps set up by the banks and credit card companies.
Make Informed Decisions
Many people make purchases without first doing thorough research or any research at all. Impulse buys like these will likely cost you more than necessary, and will often mean you end up with a low-quality product. This is especially true when buying products online, as you need to do extra research to compensate for the fact that you cannot hold the product in your hands and examine it in person.
Always check the reviews of any product you are looking to buy online on a third-party review website and pay close attention to the critical reviews in particular. This will save you from buying low-quality and/or overpriced products. The same goes for buying products in-store, even when you shop in your local supermarket. If you do some research, you will likely find better-priced alternatives.
Create a Monthly Budget and Stick to It!
This is another good practice which makes sure that you only spend the money you can afford to in any given month. This helps you to control your bad habits of spending too much on impulse buys, whether online or in a brick-and-mortar store.
However, keep in mind that creating a monthly budget alone is not enough. You also need to follow it honestly for its benefits to be reflected in your bank balance at the end of the month!
Track Your Spending
Tracking your spending will help you to stick to your monthly budget. There are a large number of apps that help you to track how you spend your money. This can help you find unhealthy spending patterns and other habits that may be damaging to your financial well-being.
Many of these apps are quite sophisticated, allowing you to set spending limits and warning you if you are about to go over your limit. If you don’t want to use an app like this, old-school Microsoft Excel or Google Sheets can work just as well!