Do you have a decent salary but wonder where your money goes every month? It’s likely your income isn’t the problem, but rather your money habits. Even if you make a large income, it’s very challenging to create wealth if you have poor money habits. Here are 3 key actions to avoid.
1. Paying yourself last
When pay day comes around, how do you manage your money? Do you pay your bills and save what is leftover? Try to do this the other way around. Think of yourself like a bill – the most important one. Transfer money into savings before you pay for your bills or expenses. This will ensure that you are making your financial goals a priority and you’ll likely spend less if there’s less in your checking account. If it’s a tough month financially, you can always transfer this money back out of your savings.
2. Being unprepared
Not being organised with your finances can cost you. From having to take out a high-interest loan to delaying your financial goals, it pays to be prepared. If you don’t have an emergency fund, start working on this. You can read more about the benefits of emergency funds by clicking here, Why You Need an Emergency Fund.
Know when your big expenses are coming up and put money aside in advance. For example, I know I need $800+ for my car registration in August every year so I make sure to put that money aside. It is a lot easier to save for large expenses when you allow yourself enough time. This prevents significant stress but also stops you from putting that big purchase on a credit card and incurring interest.
3. Putting off investing
When you’re young, it’s easy to put off investing until you’re older. Or putting it off because you don’t have a spare $5,000 to invest. While it’s important to wait until you’re ready, don’t put it off for too long. If you wait to invest, you’ll have to spend significantly more of your own money compared to someone who started investing before you. If this is confusing, I have lots of articles for beginner investors that you can check out below: