There are some reactions, especially when it comes to finances, that might ring too familiar to us as a collective. There’s that loud groan as you realize that no, choosing a non-STEM course in college doesn’t rid your life of math, definitely not when you suddenly have to figure out how to do taxes and pay off student loans as an adult. There’s the unexpected diet after blowing your petty cash on something you didn’t really need. There’s the sigh of absolute relief that comes with finding a surprise tenner tucked away inside yesterday’s jeans before you wash them.
Sometimes it feels like keeping money on your person is a vow of abstinence: you almost don’t want to spend it at all to make sure you’ll have enough left over when you need it. But in the same way starving yourself is more ineffective a diet plan than just controlling your portion sizes, not spending isn’t the way to improve your financial state either. Preferably, the trick is to learn how to spend effectively.
Track your expenses. Have you ever checked your wallet then had a mild panic as you wonder where your money went? You even think back and wonder if you were robbed at some point. But then you start taking inventory of your expenses that day and realize that that’s where your money went: into small purchases like drinks, snacks, the taxi fare you usually didn’t take, and then it all snowballed into one massive dent in your finances. When you start tracking your expenses, not only do you get more conscious about how much you spend daily, you can also review your expenses later on. Find the habit that’s costing you more in the long run and change it — this could result in making your coffee rather than buying a latte, or you could realize maintenance for your old car costs you more in the long-term than just getting a new one.
Set clear goals. If you ever do need to buy a new car, it would be best to set a realistic deadline for yourself. Don’t start making crazy changes to your lifestyle so that you can pay it off faster. Be aware of the amount you need to survive, the amount you need to put in your raining day savings, the amount you’ll need for your savings goals — and adjust them as you go along. If you need it, a lot of banks today let you open multiple savings accounts to separate your financial goals.
Pair self-discipline with strict measures. Accept the fact that self-discipline alone can only go so far. Sometimes it’s just hard to say no to temptation, especially when your careful plans fall through. That’s why it might interest you to put countermeasures in place. You could consider automating the process of transferring funds to your savings accounts and your bill payments. Or, instead of just leaving money in a savings account, you can place it in a high-interest savings account that incentivizes little to no withdrawals or put it in a time deposit.
The important thing when it comes to improving your finances is to be conscious of where you put your money, even researching the banks’ interest rates if necessary.