12 Positive Financial Habits
1. Know What Income You Have
The very first step to managing finances is to make sure you know how much you have. I work a day job – a full time career. That income is relatively easy to keep track of. I get paid every two weeks and it is a regular income. But then I also have my blog and many other side gigs. Those payments are far from “regular”. I need a spreadsheet to track the work I do and when payment can be expected, how much, and in what form such as Paypal, bank deposit, Amazon gift card, Best Buy gift card, prepaid credit card etc… For me it isn’t as easy as knowing how much I make every two weeks.
2. Know Where You Get Your Income From
Is your income from a career? Side gigs? How predictable is it? Come up with a back up plan – do you work in a career that may become obsolete in the future? Don’t let it catch you by surprise! Andrew Charlton discusses technological advancements and changes. Make sure you are prepared.
3. Know All Expenses
For some people the expenses are quite predictable – credit cards, utility payments etc… For others it can be less predictable. For example meeting the needs of special needs children, children (they do get sick), pets (we have dogs and horses), owning a home – something always breaks!
4. Live Within Your Means
Don’t rely on credit cards. They are nice to have for emergencies that may arise but using them on a regular basis can quickly get out of control. The main reason I use a credit card (medical card) is for when the animals get sick. They don’t have insurance. That card always has a balance – I just consider it part of my normal monthly expense. But gone are the days of using credit cards to fund Christmas – I did that stupid mistake far too much when I was younger. Now – I get what I can and nothing more.
5. Create a Daily Budget
A daily budget is not too hard to follow when you have consistent income and know your expenses. It is critical when you are trying to live off less predictable income. For example with my blogging income – I know exactly how much I need at the end of the month to pay for our horses. Then I kind of “back into” how much I can spend the rest of the days of the month.
6. Seriously Follow A Plan To Get Out Of Debt
I follow the pay off lowest balances first plan and that has always worked for me. Some people prefer to follow a “pay off largest debt first” plan. I like the more immediate sense of success. Either way – follow a plan and stick to it, whichever method you choose.
7. Invest In Yourself
Always put some money aside to invest in yourself. For example – how to improve as a blogger; how to make money on the side… Basically professional development for yourself. You could also invest in your self through financial improvement such as with Andrew Charlton.
8. Avoid Unnecessary Expenses
You need gas to get to work – but do you need super unleaded? You need lunch at work but do you need to go out to eat? Or will bringing a sandwich and salad from home work just as well? What about that morning coffee – bring from home or Starbucks?
9. Reduce Where You Can
There are so many great ways to sell items easily nowadays. Years ago it seemed like ebay was the only way. Now you can do as easily as on Facebook. So what are you waiting for? Not only you can downsize easily in that manner but you can also make money. You can also donate to a worthy organization and claim it on your taxes. After you take those steps – if something comes in the house, something must leave.
10. Carefully Consider Purchases
This is a big one. Avoid impulse purchases. I used to do it all the time but now that I have four horses to care for that are very expensive – I must consider any purchase carefully before making it.
11. Build Savings
First pay you! Every time – pay yourself first! You work hard – you deserve to build savings.
12. Build Retirement
Similar to #11 – pay your retirement first also. At some point you are not going to want to work so hard – or be able to. You need to prepare for that NOW. Don’t put it off.