Someone once told me “rich people follow a budget” and I still think about that phrase today. We often think that we have to manage our money when things are going bad or when we have to get back on our feet, but that’s simply not the case.
Here are eight routines that people who are great with their finances follow in their effort to build wealth, which also helps you get out of debt.
Follow a personalized budget
Personal finances are just that, personal! Don’t download a budget template or trust that you can use the one your friend had success with. A family of four spends more on groceries than a single person. Rent in the city costs more than living in BFE. Your bar tab in your twenties is very different than in your forties. You get my point, create a budget that fits your lifestyle and allows you to reach your goals while taking into account your income.
Live below your means
Debt is simply spending more money than you make and we want to avoid that at all costs! Be sure to know what your monthly and annual take-home pay is and live within that number. If you can’t afford to #liveyourbestlife then either increase your income or decrease spending in areas that don’t truly make you happy.
Create a savings plan around retirement goals
Don’t just sign up for the 5% savings rate with your 401k administrator. Use calculators to figure out how much money you will need at retirement and work backwards to determine how much that translates to in monthly contributions today. Our retirement goals look different, you may be on a FI/RE plan or you may want enough to travel the world in a jet. Whatever your plan, know how much that life will cost you.
Pay off all high-interest debt
Not all debt is bad, but all high interest debt is! Any easy rule of thumb is to look at debt with interest rates above 5% and pay it off as quickly as possible. Be sure to use the debt snowball or debt avalanche method to make progress and stay on track.
Utilize apps and software
There’s an app for that! Make managing your money easy. Try apps like Debt Payoff Planner to keep track of your debt, You Need A Budget (YNAB) to track your net worth and follow a budget or Splitwise to track group vacation expenses. You’ll immediately notice your stress going down as you gain clarity around your money.
Pay credit card balances in full each month
Never carry a balance on your credit card, that’s when interest charges kick in and you’ll be paying money just to swipe your card. If you already have a balance it probably qualifies as high-interest debt should be paid off as soon as possible. Otherwise, if you swipe and pay in full each month, you’re one of the few gaining the rewards without paying a penny!
Learn how to be frugal, not cheap
When you see store-brand groceries in my cabinets, it’s not because I’m cheap, it’s because I know it’s the exact same as those more expensive brands. The same goes for my jeans that aren’t $100 a pair, it’s because I’d rather sip a fancy old fashioned than spend my money on clothing. Since we all care about different things, learn where you can spend less without sacrificing what you care about most.
Make more money
Can I get an amen! When we make more money we have more choices and life becomes a little bit easier. We still have to manage that money and we still need to keep an eye on our spending but if you can continue to ask yourself, how can I make more money, more things will start to fall into place. If you don’t have time for a side-hustle you can seek a promotion at work or change employers all together.
Ready to learn more or get started with Money Gal Coaching? Book a free call with me and let’s put financial clarity on top of your priority list this year.
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