3 Ways to Change Your Financial Habits
May 11 2016 Posted by Guriqbal Chahal, MBA, PMP
Some financial habits are good, but others can hold you back and prevent you from saving. If you need to change your financial habits, it is important to take a step-by-step approach. This three-step approach can help you get a handle on your finances.
1. Set Specific Goals
Many people fail in finance because they set goals that are too vague. Setting goals like 'save more money' or 'put money away for retirement' are far too vague to be effective.
Instead, set specific goals like 'save 10 percent of every paycheck' or 'pay cash for every purchase.' These specific goals will be more effective at getting you to change your financial habits.
2. Find Out What is Holding You Back
You have the best of intentions when it comes to budgeting and saving your money, but somewhere along the line you go off track. Until you find out what is holding you back and sabotaging your efforts, it will be almost impossible to stick to an effective budget.
Identifying these budget bottlenecks is an essential part of the process. Review all of your money habits, from the use of credit cards to how often, and promptly you pay your bills. If you tend to run up a balance on several different credit cards, put those extra cards away and restrict your spending to a single card. If paying the bills all at once is too overwhelming, pay each one as it comes in. Identifying and overcoming budget bottlenecks is one of the best ways to get a handle on your spending.
3. Put Your Plan in Motion
Now that you know what has been holding you back, it is time to put your plan into action. Trying to do too much too soon could sabotage your efforts and cause you to fail. Starting slow is the better approach. You can work your way up to your ultimate goals later on.
If your goal is to put aside 10 percent of each paycheck for retirement, you might want to start with 1 percent. Once you are used to that investment, ramp it up to 2 percent, then 3 percent and so on, until you reach your goal.
Getting your finances on track is not an easy process. If it were, everyone would have a stellar credit score and a fully funded retirement plan. If you have been putting off aspects of your financial life, now is the time to get going.