Making good financial decisions can be tricky, especially if you have never received any advice on money management or undertaken business studies as part of your education.
In today’s economic climate with high inflation and a cost of living crisis, however, it has never been more important to understand the value of your money and learn how to make wise decisions with regards to spending and saving your hard-earned cash. There's rarely such a thing as free money, but by making good financial choices you can make your money go further.
Even if you have not had any grounding in money management, there are ways to better understand how you spend your money and how to maximise the performance of your savings. Discover three easy tricks to making better financial decisions which will see improvements to your wealth:
Understand your finances
Before you take steps to becoming better at money management, first you need to understand where your money is stored and where it is going. Do you know how much of your salary is split between your bills, spending, and your savings pot? Many of us don’t pay attention to the flow of our finances throughout the month, but it is important to have a grasp of the influx and output of our money in order to become savvier with handling it. If you do not already have one, opening a savings account will be a great way to start putting money aside for a rainy day and is a great way to kick-start your journey to being more organised with your finances.
Take your time to think before spending
One of the biggest ways to make better decisions when it comes to using your money is by resisting the urge to splurge. Our mood can have a dramatic effect on our expenditure, with many of us turning to retail therapy when we feel low or splashing the cash when we are on top of the world. To avoid going beyond your means or wasting money unnecessarily, refrain from emotional spending. Experiment with different methods that will prevent your mood impacting your financial choices, such as opting to live by the three-day rule. Sticking to a spending rule could help to soon see your finances moving in an upward direction.
Another great way to make sure you make better financial decisions is by seeking help or advice from those in the know. There are plenty of ways for people to get good financial planning advice which do not cost the earth. One great resource, for example, is Citizens Advice and the Money Advice Trust, both of which offer free financial advice. There are also lots of websites offering money saving tips, such as Martin Lewis’ Money Saving Expert which covers great day-to-day financial advice.
Taking steps towards making being more financially savvy is a great skill to learn and will certainly set you in good stead for the future. Take time to think before spending money on purchases, set up a savings account, and go to professionals for advice when needed. Soon you will see a big benefit!
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