Money can be a major stressor. Conducting a personal financial review every quarter (3 months) is a way to protect your financial health.
1. Run your household finances like a business.
This country is ran like a major corporation that sets the framework for the private sector businesses and major corporations, so it only makes sense for you to manage your finances the same way. This way you will have the basic understanding of how finance work, help you to see the patterns within the country's financial policy's and how it affects household economy, how to make adjustments to your household economy when you see changes in the national economy helping you to be pro active.
Tips to Consider
Identify fixed costs and variable costs. Fixed costs are the same every month like rent/mortgage, car payments, insurance, etc. Variable costs or expenses that are not the same every month like water usage, food, clothes, etc. When your income is reduced or interrupted, you can make adjustments to your variable costs.
Identify useless subscriptions. More people are asking to setup autopay to guarantee delivery of funds. Subscriptions bank on you forgetting that they exist so you won't cancel when you are no longer interested or need them. Look at your credit card and bank statements and clean house of useless subscriptions. If you are working 8hrs a day and can only watch tv 2 days out of the the week, you do not need multiple tv subscriptions.
Deprogram yourself from instant gratification. Patience is a virtue. IG is a conditioning to create impulsive shoppers. If you can't purchase it outright and it is not a need, practice the art of discipline and save a percentage each paycheck for that desired purchase.
Learn the difference between good and bad debt. Credit cards are not free money and loans shouldn't be used as a go-to to clean up financial messes. People are conditioned to think that credit cards make things affordable By low monthly payments. The interest charged isn't worth it a lot of times for frivolous purchases that you pay over a long period. The science to credit cards is this. They are to increase your buying POWER. Use them to acquire ASSETS. ASSETS make you money. The Interest is then used to offset the taxes off the income you made. To build credit, use them pay the bills you would pay from your bank account. Then pay off the card with the bank account. You do not have to be in bad debt to build credit. Debit cards have been obsolete for the last 3 decades. Time to catch up!
Learn the difference between cost and value. Value is getting more bang for your buck regardless of the cost. It is of Quality. Cost is merely the amount you spend. If you ONLY buy or shop for things and service as a matter of cost, sometimes you will end up spending more because they are not of quality. You will end up having to replace more frequently, or have to pay for a clean up job because a service was performed poorly. This is why you should make a conscious effort to check market rates for any product or service and compare.
2. Monitor your spending.
Being in the financial industry for 11 years, 1 year in mortgage industry, retail for a combined total of about 15 years in different positions of management, money handling and management, inventory, sales, and marketing.... one thing was consistent across the board. Goal setting, Planning, and strategy.
The 1 constant I have observed by clients throughout the years that EVERYONE complains about not having enough money. From the impoverished to those making 6 figures as much as $400k. That's because there is no monitoring of finances through budgeting. No Goal setting, planning, or strategy. The more money you make the more you spend without realizing where your money is going.
This is also true with small business owners. There is a tendency to use their skill or trade to substitute for the lack of knowledge in business operations, which includes keeping books and monitoring expenses. The ego gets in the way of conducting proper business analyses. The number of surprised looks when I have to tell a business owner that they are over or underpricing, over or underbidding for contract labor, spending too much in marketing unnecessarily, calculating wages wrong, use the wrong business tax structure causing them to pay higher taxes.
It is important to have a budget so you can make a conscious effort to make changes and adjustments as your income changes. it is unrealistic to try to maintain the same cost of living when your income reduces. You have to determine what expense you have to reduce or eliminate as businesses do.
3.Take your emotions out of your spending habits.
It is important make plans and set goals for your money because multiple people have already. From friends and family who regularly as to borrow money they have no intention to pay back, marketing firms that are hired by businesses to gauge the spending habits of different demographics, to social media and browser search engines that have algorithm to monitor your interests.
YOUR DOLLARS ARE BEING CLOCKED.
Most people do not realize that their spending habits are manipulated, conditioned, or engineered by emotional triggers. From the use of colors, music, images, trigger words used by sales people in person, there are psychological methods used in marketing all the time. This is why people tend to buy or take a financial risk what they want, but will not make the effort or take the same risks to better their financial situations. This is because there is no instant gratification of the emotional trigger of pleasure.
Emotional spending is very much like emotional eating. You are triggered by an emotion and that may cause the irrational response eat or spend in order to release endorphins that creates a mood booster.
This would include survivor mode. When you are in a constant state of survivor mode, you tend to also trigger the defeatist mindset of victimhood. Everything is always doom and gloom, there is no motivation to try or learn something different, the assumption is made that you tried everything, and you become comfortable with struggle because you have accepted it as a way of life.
Financial Thoughts!
Your decision to take control over your finances will involve a mindset change and the willingness to operate out of comfort zones. Here are some things to consider:
You do not and will not know everything no matter how old you are. Put your ego in check. The limitation of your life experiences is not conducive to the multitude of options outside of that.
Lack of financial management and the refusal to take control doesn't make you a victim.
Just because you can't afford something, doesn't automatically mean the cost is too high. You may have a budgeting, income, or other money management issues. Check market rates before complaining.
Stop listening people who tell having a job is being a slave. Slaves do not get compensation. JOBS are PAID EDUCATION. Smart people go to their job to learn and observe, in Realtime, business operations to better their positions or start their own business avoiding student loans. People who only work for a paycheck are slaves to a system that banks off of creating permanent consumers.
Produce more than you consume.
Instant gratification is not your friend.
Be mindful of your emotional triggers.
Always secure an Asset when the opportunity present itself.
Your lack of preparedness is not an emergency for someone else to bare. Show appreciation when someone extends accommodation as a courtesy. You are not entitled to it.
Everyone has a sob story. Sob stories cannot be used as a form of currency.
Take a free basic Business operation class. Wouldn't kill ya.
Utilize the free financial literacy classes at your financial institution.
Act your Wage. If you can't afford to keep up with the Jones's, stop attempting to and expecting everyone to foot the bill when you can't pay your rent or bills.
Make an effort to find more solutions than problems.
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