Whether we like it or not, finances will always be a part of our lives. But instead of letting them overwhelm us and get out of control, we can take steps to be intentional and in control of our money. There are a variety of ways to be more mindful of our finances, some of these include being mindful of taking out loans, thinking twice when spending, setting a budget, growing our savings, and becoming more financially literate. Practicing these steps can help us have a better, healthier relationship with our money.
Be Mindful Of Taking Out Loans
In a perfect world, loans could be avoided at all costs, but alas we do not live in a perfect world. Financial emergencies can pop up at any time, whether it’s car issues, home problems, or health concerns, they can be unexpected and costly. When looking to take out a loan, the first step is understanding the different kinds of loans and becoming knowledgeable on the options available. From there you can select the option that best fits your current financial situation. Ensure that you select a loan with a payment plan that you can afford and follow consistently. Missed payments and compounding interest rates can often lead people into deeper financial holes than where they started.
Think About Your Spending Habits
In the modern-day of credit cards, it can be very easy to overspend. It is difficult to conceptualize the idea of money spent when swiping or tapping a card. When looking to spend money, approach the situation rationally. It is best not to make any financial decisions when you’re feeling overly emotional or overwhelmed. Think critically about where you’re spending money by separating expenses into “wants” and “needs”. “Wants” refer to things that you may desire but don’t necessarily need. These are excellent items to save up and buy when other expenses are taken care of. “Needs” refer to the expenses that you must spend money on, including rents or mortgage payments, car payments, groceries, gas, health insurance, etc. Be sure all your “needs” are addressed before spending money on your “wants”.
Set Up A Budget
Though it sounds overstated, budgets really are the key to developing sustainable spending habits. Budgeting can help separate what money you can spend and what money you should save. A common misconception about budgets is that when you choose to budget, you can’t spend money on anything fun or recreational. But this isn’t true. In fact, the most sustainable budgets include recreational spending categories. The quickest way to overspend is to not allow yourself any leeway. If you like to go out to eat with friends or take weekend vacations, then make room in your budget to do so. While financial sacrifices may have to be made occasionally, overall you can enjoy spending your money while also being responsible about it.
Grow Your Savings
It is never too early to start saving. When looking at your income, you should always be saving a certain amount. What percentage of your income you save is a personal decision and can depend on a variety of factors. Over time as your situation changes, your savings plan can change with it. If you find you have a hard time with saving, consider setting up automated transfers to your savings account. This way, the saving process is done for you, and the money you see remaining in your checking account is what you’re free to spend. Once you have built a good savings account, you can consider investing that money. This could be in the form of stocks, long-term investments, or even in real estate.
Financially Educate Yourself
Like with all things, education is important. Managing your money can be difficult, especially when you don’t know much about the process. Educating yourself in finance can help give you the tools to get in control of and change your economic situation for the better. The more comfortable you are with money, the better your decisions surrounding the topic will be. There are plenty of online resources on YouTube or Google that can help you learn the fundamentals of money management, investing, and more. While you don’t have to become a financial expert, at least understanding the fundamentals of your specific economic situation will set you up for a more prosperous future.
The Bottom Line
Money management can be difficult and overwhelming. Often we can find ourselves in financial predicaments that could’ve been avoided had we learned to be more mindful about money. Being a passive bystander in your financial situation can land you in debt, among other predicaments. By practicing mindfulness within your finances, you can improve your habits and overall better your economic situation.
