The Six Habits You Need for Good Finances

Stable and healthy finances don’t just happen; not for most of us, anyway. Most of us need to cultivate good financial habits and make plans – both long-term and short-term – in order to have a comfortable lifestyle and to be able to invest for the future.

It’s easy to get into these good habits if you know how, as many of them don’t involve huge projects, sacrifices or even much effort. Some of the habits are more of a state of mind than anything else, so eyes down for a full bank account…

Live within your means

Ideally, you should live well within, or beneath, your means. If you can easily afford a new pair of winter boots for £100 because you have a budget of £120 then that’s great. If, however, you can buy them online for £85, then wait that extra couple of days for them to arrive. You’ve just saved £15. Just because the money’s there doesn’t mean you have to spend it all.

Look at the value, not the price

Those boots will last you for two or three winters because they’re well-made. There’s no point shelling out, say, £35 on a shoddy pair that’ll develop a leak in January. There’s also no point in paying £300 for a pair that’s only slightly better made than the £100 (£85 online, remember…) boots because you do only wear them from December to March.

Read about finances

So many of us are missing a financial education that it’s untrue! There are people who think that paying credit card bills at the last minute, or paying only the minimum amount, is better because your money is in your account for longer. The amount of interest that payment will make in your account is way less than the amount accrued on your card. As for minimum payments – that’s a serious error of judgement. Read blogs, forums and books about finances when you get the time – you’ll be amazed by what you find out here, for example.

Impose a cooling-off period on purchases over a certain amount

Unless that purchase is a vet bill or a root canal treatment, of course! If you see some kitchen gadget that makes you wonder how you survived without it, then stop and think. You’re alive, right? So, stop and think for at least 48 hours before buying it. You might just realise that it’s a want rather than a desperate need. Wants are always expensive.

Get involved in and donate to charity

This might seem a bit counter-intuitive, as it involves giving away money, but donating to charity means you have more appreciation for the things you have in your own life. If you donate £20 to pay for some vaccines in Africa, then you might feel differently about dropping the same amount on a tube of mascara every couple of months.

Don’t rush to replace things

If you have a contract phone or a car on finance, then don’t automatically upgrade as soon as you come to the end of your repayment period. If you’ve been paying £300 a month for your car and after five years you’ve paid it all off, this doesn’t mean you need to get a new one. Coast around in a still more-than-roadworthy vehicle for a year or two and pocket at least £3,600. 

Actually, that money should go into your savings, not your pocket!

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