With the festive season rapidly approaching, it’s important to be aware of your spending habits. This will help you make smarter decisions. Below are some clever tips to help you stay on track with your saving by spending a little less.
Tip #1: Spend less than you earn
Spending less than you earn is an issue of financial discipline. You don't need to be a financial whiz to understand that by just controlling how much you spend, you can ensure a healthier bank balance.
Tip #2: Measure your spending
Understanding your spending habits starts with measuring your spending over a number of months. This is the most effective financial habit that you can adopt, because if you don’t measure how much you spend, you can’t determine if you are spending less or more than you earn. Understanding whether you are spending on necessities or luxuries is important to effectively manage your cash flow.
Tip #3: Set goals
If everyone in your household understands the household's financial goals, they will better understand the need for financial discipline and the sacrifices they might need to make. Setting goals will give you a sense of financial purpose, which will improve your discipline.
Tip #4: Correct past mistakes
It is recommended that you don’t splurge on buying big items such as a house or car as this can lead to a negative monthly cash flow, which means that your income is less than your expenses. It is important not to ignore default notice letters as they will not go away and will just add up.
