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If you decide to rethink your financial habits and approach to budgeting, the process is not easy: it is a real life paradigm shift. But if you follow proven advice, in a year you will reach a new financial level.
1. Dream!
What do you really want? Do not think that it is still impossible to get what you want (“Where can I get the money? I still won’t succeed …”) and that this is a waste of time. A dream is a powerful resource. Dreams guide our daily actions. For example, dreaming of a new house, we are looking for a higher paying job and studying the features of building private housing.
When you imagine what you want, whether it’s a new apartment, travel, or TV, try to «see» the dream in detail. How many meters in the apartment, layout, what kind of view from the window? Where are you going on vacation: to the sea or to one of the European capitals? How do you get there?
What do you experience in these fantasies when your dream comes true? What do you feel when entering a new apartment: euphoria? Delight? Long-awaited peace of mind, because you no longer need to pay rent? Your condition will be a beacon and the motivation that will make the process of accumulating the required amount easier. You no longer “tear off” a solid part of your income — no, you are laying the foundation for a happy future. And by the way, a dream formulated in terms of cost and a clear deadline is already a financial goal.
2. Dream big, dream big
Starbucks CEO Howard Schultz wrote, “Dreaming small will never succeed big!” Financial plans should not be limited to one year — you need to keep in mind and more distant time perspectives.
This will give you two types of goals: medium-term goals that you want to achieve this year (go on vacation, buy a new phone), and long-term goals that take two or more years to complete (renovate your apartment). Once you have set your goals, it is important to clarify the amount needed to achieve them and choose a time frame for achieving them.
If the monthly payment turns out to be too large, you can postpone the implementation of the plan
For example, you want to go on vacation in August and you need 120 thousand rubles for this. There are 5 months left before the vacation, which means that you need to save about 24 thousand rubles a month. With the money saved, you can buy tickets in advance and book a hotel, due to which the trip will turn out cheaper. If the monthly payment turns out to be too large, you can postpone the implementation of your plan or try to reduce the cost.
3. Create a financial safety cushion
This pillow allows you to feel more free and independent. Let’s say there have been changes at work (a manager has changed or you have been demoted), and you feel uncomfortable. Knowing that you have a financial reserve, you can say goodbye to your old job. In addition, you do not have to live in total savings mode, trying to buy only goods on sale.
The size of the airbag should be between 3 and 6 monthly costs. An important nuance: you should not be tempted to spend this money, so it is best to arrange a bank deposit with the possibility of withdrawal. So this money will serve as a reserve and at the same time will be protected from inflation.
4. Soberly assess your strengths
Many probably happened, sitting on a strict diet, after a while to break loose and literally empty the refrigerator. The same is true with financial savings: a sharp cut in the amount of spending is fraught with stress, which inevitably leads to a rollback. New rules should be introduced gradually, eventually making them a familiar part of the new life. It is advisable to save no more than 30% of your monthly income, but you can start with 5%, increasing the percentage of savings month by month.
5. Look for alternative sources of savings
If you’re lucky enough to get a pay raise since the new year, start saving half of the raise. It will be imperceptible for you, and at the same time you will come closer to fulfilling your goals. If the increase did not happen, this is not a reason to be upset. Maybe it’s time to look for sources of additional income. One option is to receive tax credits. If last year you paid for education, treatment or bought an apartment, then in January you can submit documents, and in April-May you will receive money in your account.
The main thing, without having time to realize what has arrived in your pocket, is to transfer the free amount to a savings account.
6. Hurry to part with the money
After receiving your salary, make a transfer to a separate account on the same day (some banks allow you to perform this operation automatically, you just need to select the day of the monthly transfer). Imagine that this is a strict loan to yourself. After a few months of payments, you will come to terms with the fact that the amount of current expenses has decreased, and adjust the costs to the new realities.
7. Strive for conscious spending
What are you making money for? Of course, for fun! You trade them for feelings and emotions. Each of us has their own: some have a sense of security, others have a sense of success, others have pleasure. When we spend, we enjoy delicious food, watching a movie, stylish clothes, and this is normal.
Try to spend money consciously, asking yourself questions more often: “Is this really what I want now? Will it please me?» If the answer is yes, feel free to make a purchase (if, of course, it fits into your budget). If you are not sure and do not feel a surge of positive emotions at the thought of buying, you should think about it and, possibly, refuse to spend extra money.
Some habits may no longer be enjoyable, but still eat up a certain percentage of your budget each month.
Guided by this principle, conduct a “analysis” of habitual spending. Some habits, such as coffee to go, may no longer be enjoyable, but still eat up a portion of your budget each month.
By following the principle of «conscious spending», you can enjoy shopping at a lower cost.
Try it! It works.
8. Don’t delay: the main thing is to start
By transferring the planned amount to a savings account and relying only on the balance of income, you will become more attentive to your own spending and quickly learn how to detect “money sinks”. Your efforts will now be focused on optimizing spending and trying to increase savings.
And do not forget to inspire and support yourself on the way to new financial goals, celebrate each new victory over yourself and your habits. This will be an additional incentive to achieve the desired.