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Finances are something we all struggle with sometimes, and making sound financial decisions is not always easy. Ideally, we would all love to have plenty of funds to invest, investments that are safe and provide a steady additional income, and very few (if any) financial struggles.
Since we live in a world where that is rarely possible, let’s look at six ways you can make better financial decisions and do your best to improve your income.
Be Honest With Yourself
All of us sometimes rush into decisions that are ultimately bad for us because we feel a certain way in a certain moment. We buy discounted products we don’t actually need, make extra purchases just to qualify for a discount, fall for an advertising gimmick, or buy a product just because a friend has raved about it.
It’s okay to make these kinds of purchases every once in a while, but the key here is, to be honest with yourself about the money you spend. Why and where are you spending it, and do you want to change your habits in order to save more?
Finance Your Lifestyle With Cash and Not Credit
Reaching for your credit card in order to finance the lifestyle you want to lead is not the most prudent of choices. It actually means you’re going into debt to finance your habits, and that’s a very slippery slope to find yourself on.
Whatever it is you want to be able to afford (in terms of the everyday lifestyle items like coffee, food, clothing, and so on) – pay for it with the cash you have readily available and not your credit card.
Sleep on It
Making decisions when you are stressed, tired, and sleep-deprived is never a good option. Your judgment will be impaired, you won’t be able to look at a situation realistically, and chances are you’re going to make a financial decision you will end up regretting sooner or later. Not to mention that sleeping well will also boost your overall health and wellbeing significantly.
Make sure you’re well-rested when considering any major financial decision – especially if it involves a significant investment or an amount you can’t afford to be without.
Don’t Be Too Greedy
Consumer society makes us believe we need to always have more, spend more, buy more. This makes us spend money we don’t have on things we don’t actually need, and it is only a cause for more stress while spending more than you “want to.”
Instead of focusing on the things you don’t have and feeling bad about it, try to focus your efforts on the things you do need and actually want to have. Turn your attention to attaining them, rather than falling in the trap of believing that a certain item will add something to your life even when you aren’t actually interested in it.
Prioritize Before You Spend
Good financial decisions are based on prioritizing your finances. In other words, what you need to do is decide what’s most important to you and start investing most of your money into your top priorities.
Ideally, you want to write down your priorities somewhere. Once you have them down, calculate how much you actually need to be spending on each – to attain it, to preserve it, to grow it.
With this list in hand, you can stop yourself from spending money where you don’t need to be spending it, and actually focus on achieving your goals.
Track Your Expenses
Finally, in order to be able to make the best financial decisions, you need to stay on top of your income and expenses. And the best way to do that is to keep a very precise budget.
Track all of your incomes and all of your expenses – no matter how small they may seem. This will enable you to know exactly where you stand in each given moment, as well as to predict a part of the future and make the most prudent investments.
Try to implement some of these ideas and see where they lead you. Bear in mind that you will need to instill these habits over some period of time – you can’t expect them to work instantly. An adjustment period is warranted, but once you get over it, you can expect to be looking at your finances with different eyes.