In today’s world, it is so easy to buy new things at any hour of the day. All of us are blessed with living in a period of time where there’s a surplus of things all of us can purchase at our fingertips.
The issue that plagues our generation is not so much making sure we have enough of what we need, but quite the opposite. We have the difficult task of choosing what we want, when we want it, and not blowing every last dime on these things.
I know from personal experience, that quite a few millennials are very determined to have what they didn’t have growing up. So we overextend ourselves, and our finances, to overcompensate for that perceived shortcoming.
Or we spend more than we should – trying to keep up with the Joneses.
All of these things only cause more of our hard-earned cash to slip through our fingers. Which in turn, begins the slippery slope towards becoming terrible with money.
So, if you want to stop the money drain, become more disciplined and have a higher chance of reaching your financial goals, then these tips may just help you get there.
1. Pay off your credit card debt in full every month
Even if using a credit card doesn’t cause as much emotional pain, the majority of us still prefer to use a credit card. With approximately 70% of us choosing a credit card over cash for transactions, the chances of credit card debt affecting your finances can be pretty high.
But, just because you choose to use credit over cash, doesn’t mean that you have to go into credit card debt. The best way to avoid this is to make sure you pay off your credit card(s) in full every month.
By doing so, you avoid any interest charges from accruing and still get to take advantage of the credit card rewards. Just make sure that you regularly check your credit card to ensure there are no erroneous charges not made by you.
At the same time, you should be checking your balance so that you know exactly what you need to budget next month to pay it off by the due date.
Read more: How To Use A Credit Card Responsibly
2. Open a high yield savings account and save a set amount every month
No matter what your debt-to-income ratio is, there is always room to save something. It may only be $20 a month, but that will add up over time. And while an amount as small as that may not add up to what you need for retirement, it can still be a huge help.
The best way to bulk up your savings account is to budget for the same amount to be deposited monthly until you get to the specified amount you need to feel comfortable.
My advice? Just pretend this amount is another monthly bill that must be paid, so you won’t feel tempted to spend it.
The amount you end up putting away in savings is your emergency fund. And everyone needs a fund to dip into in those times of emergency. Having an emergency fund helps cushion the blow when life gets tough.
Interest rates closer to 2% in high yield savings accounts are still much better than the national average of 0.09% in traditional savings accounts. So, while these high yield savings account rates may not be anywhere close to the average return you will get on investing your money, it’s still nice to make some interest on your savings.
The best high yield savings account, in my opinion, is the CIT Savings Builder.
Read more: How Much Should You Save Every Month?
CIT Savings Builder
CIT Savings Builder has interest rates starting at . Compared to the pennies you get from a credit union savings account, this is an incredible interest rate.
You only need $100 to open an account and they charge no maintenance fees. To earn the highest APY, you need to get your account up to $25,000, or you need to deposit at least $100 monthly.
The CIT Savings Builder has a completely online platform, so everything can be done directly from your smartphone, just to make life simpler. They are also FDIC insured up to $250,000 per account type.
3. Set your financial goals
Setting your financial goals is a very important piece of the puzzle. After all, it can be extremely difficult to be disciplined about money if you don’t have clear cut goals lined up.
The most effective way to do this is to set short-term, mid-term and long-term goals. Here are a few examples of each type, but feel free to fill in the blanks with your own personal financial goals.
- Putting away the same amount every month in your emergency fund.
- Going out to dinner with friends twice a month.
- Small household projects (planting a small indoor garden, painting a room, etc.)
- Saving for a weekend getaway.
- Putting money away for holiday presents.
- Saving to get a new puppy/kitten (YES, they cost money!)
4. Stay focused on your financial goals
Once you have figured out your financial goals, staying focused on them is the next step. And sometimes, that can be the hardest part. It is so easy to get derailed when life throws you a curveball.
But, one of my favorite tools to help keep you focused is Personal Capital. I’ve been using it for years and it has really helped me see where I’m at and where I want to go.
Personal Capital offers a few different services for investing and checking up on your financial health. But, in this instance, I’m referring to the free tools they offer to keep track of your net worth.
You can create an account with them without opening an investment account. The wealth management and planning tools are the ones that you will probably be most interested in to help determine where you are at currently.
You will need to connect all of your financial accounts within the tool. These will be things, such as:
- Checking account.
- Savings account(s).
- Investment account(s).
- Student loan account(s).
- Auto loan account.
- Mortgage account.
- Credit card(s).
- Medical debt account(s).
Sometimes, it can be pretty scary to see what your actual net worth is vs. where you want to be.
But, I use this as a driving force to work harder every month to increase my overall net worth. Because the faster I can get my net worth up, the faster I can get to my long-term goals.
5. Determine your needs vs. your wants
Setting up your financial goals and a way to track them are the first steps. But staying on track can get tricky when life happens. This is where needs vs. wants come into play. There are things that all of us want to have. But these are the things that can throw us off track so fast it will make your head spin.
So keeping in mind if the item/service is a need or a want can help you be more disciplined about your money. Just remember to think long and hard about any purchases before you pull the trigger. If it is a need, then go ahead and do it. But if the item is actually something you want instead, it’s usually best to hold off even for a bit to make sure you still really want it as much as you think you do.
Because reaching your overall financial goals takes a lot of discipline.
6. Reduce, reuse, recycle
When it comes to purchasing wants, you have a few other options that can save you a ton of money. If there is an item that you are wanting to purchase, but it simply isn’t in the budget, what might be some other ways to achieve the same goal?
Reduce, reuse or recycle may just be the best option here. If you have things in your house that you can get rid of (and maybe even make some money off of their sale), then that is one way to get the potential want. Sell your old stuff and then use the proceeds to purchase the new want item.
Or, if you can reuse an item you have in your house already, paired with something else, in order to create a similar item, then why not do that? Sometimes, all a table or chair needs is a fresh coat of paint in order to feel like a completely new item. So get creative and think outside the box about things you already have at your disposal.
And if all else fails, recycle your old items. You may not make any money off of them, but you could potentially get a tax write-off. Plus, it declutters your space, which can make it feel like a completely new room. Sometimes, that is really all you need.
7. Avoid peer pressure to spend
Everyone wants to have fun and enjoy the ride, but sometimes things can get a little out of hand. And our friends are usually the biggest culprits of increasing our spending. They want us to go and play with them, which can cost us more than originally anticipated.
Just going out to have a meal or a drink with friends can end up costing $100 or more in some instances. Something that sounded so innocuous, has now completely derailed our budget for the month.
This is where you have to create a part of your budget for having fun. But, once you decide how much that monthly allowance is, you can’t go over it. Having this in place will make it easier for you to make these financial decisions when the peer pressure hits. Instead of having two-three drinks, only have one. Go out for lunch instead of dinner, or a matinee instead of a night movie.
All of these options still give you the freedom to hang out with your friends and enjoy your life, but it won’t cost you nearly as much. And when you stick to your budget, your future self will thank you for your discipline.
Overall, it is extremely easy for our money to flow through our fingers like water. This is why you have to be cognizant of what you have and where you want to be with your finances.
Being disciplined with money is an ongoing issue for a lot of us; getting financially fit is a tough one for sure.
I always say one step at a time.