5 Tips On How To Be Financially Smart
Remember the most important aspect of any kind of change is to start small. Don’t overwhelm yourself. You CAN do this! Start with what you can control and be consistent.
1. Add up how much you are spending on eating out (yes, 2 A.M. visits to Freebirds count). Once you’ve totaled how much you are spending, make the decision to spend half or a quarter of that amount. It doesn’t mean you can’t eat out or have IV Deli deliver midnight snacks. It’s about thinking ahead and planning so you use your money wisely, and get the most VALUE out of your money.
2. Speaking of value, the next time you’re buying something think about how long it’s going to last you and how much VALUE it’s bringing to your life. You may be wondering why I’m capitalizing the word “value.” Well, because it is the most important aspect of your purchase. We often get sucked into stores by the SALE sign or because it’s cheap, but more often than not we don’t NEED whatever we are buying. A great example of a cheap product with NEGATIVE VALUE is fast food. I know, I know. I love me a double-double with animal style fries as much as the next person, but make no mistake, that food isn’t good for you, therefore, it’s a negative investment offering you a negative value in return for your money. Why not spend that money on learning how to do something new or save it for a post-graduation trip? Again, I’m not saying don’t eat out. I am saying eat out less, and save the money you would have spent on a burger and fries for something you will remember forever!
3. If you do nothing else, give yourself a weekly budget outside of your bills and groceries budget. I give myself a $50.00 a week budget for things like a manicure or eating out. If I’m lazy and don’t pack a lunch, I end up spending all of it on food and there goes my primping and/or other miscellaneous budget. I do this because once I started adding up my expenses I realized that I had spent thousands of dollars on food, and I had nothing to show for it except maybe some extra pounds every now and again. I now invest my money in myself by taking a yoga class or going on epic adventures and trips.
4. Leave your credit cards at home when you go out! The reality is that sometimes we need credit, but it’s how we manage it that matters. Before you make ANY purchases on credit, asses you financial situation. Write down how much money you earn after taxes (let’s call this your “bring home”), and compare it to what you want to buy. If your bring home is $380.00 a month, and you want to purchase a new iPhone for $1,000.00 with your credit card, at a 22% interest rate, you will be making $200.00 payments for at least ten months. After interest, you will have paid almost twice as much for the phone! Instead, wait to buy the phone until you’ve stacked the cash for it. Save $120.00 every month and when you meet your $1,000.00 goal, go buy it! Yes, you’ll have to wait to get what you want but you won’t have to pay ridiculous interest rates for it. And remember, how much value is in an iPhone? A thousand dollars can take you to the other side of the world, it can make you money in the financial market, it can pay down your debt, and it can also sit quietly in a savings account. It’s YOUR choice. Be judicious. Think of credit cards as your last resort. Keep them for a rainy day, not for everyday use.