To be better with money is actually simple. What is difficult is to change your habits that you have practiced for years. Here is some advice and tips to help and remind how to be better with money.
# The first rule to get better on money is to see how much you spend and then try to cut out the unnecessary. World’s most famous wealth guru and the third richest man in the world, Warren Buffett does not spend on things he does not need. He does not buy a Rolls Royce because other rich men do. The same applies to you. Do not buy that expensive smart phone because your peers do so.
# See to your bills. Many people have the tendency to procrastinate paying the bills. This does not help, unless you get interest out of it. Pay your bills on time, some offer rebates if paid before a particular time. Do not ever ignore credit card bills, always pay it on time. Many people take credit card benefits too casually and end up paying huge interests.
# Make a list of your spending. Making lists sounds like a boring task to many of us. The truth is it is one thing that the best money savers and wealthy people would do. When you make a list of where you spend, you have a better picture of your activities. Some of the most ignored expenditures are in smaller amounts which we commonly overlook just because the amount is little. These amounts add up and show your spending habit. Practice this habit for at least six months and you will see that your attitude towards handling your money has improved.
# If you have more than one income source, no matter how small, build it up. It is better to have multiple income streams. Simple things like putting up your money to a fixed deposit or mutual fund will create more income sources. Keep a track of how much you earn and try to invest it again instead of spending it.
# Think what you want to buy beforehand. Instead of just going to the stores it is better to make a list beforehand. You will save time and money. It will also save your attention from buying unwanted items.
# Spending is also important. While saving is important so is spending. Being stingy is worse than binging money. In fact both are extremes. When you make a list, keep some money aside to buy what you want. Plan some money away to buy something that needs more. This way you will enjoy spending without feeling guilty about it later.
# Know how to save and spend. When we earn our salary or income, never should we see to our expenditures or bills first. The first thing should be to put away 10% to 40 % of it. Divide it for a long term saving and into investments. Use the rest of it for your bills and expenditure. Within a year you would see the result of being better with money.
# Watch your cash in your wallet. Keep it to a minimum. Most of us simply spend all that we have in hand without being aware.
# Use online spending wherever possible. This will help you keep a track of your spending.
# Use common sense. Do not buy or go for financial commitments that will cost you more than you earn. Why should you buy that expensive popcorn in the multiplex when you can get at less than half price outside? If you are using money to buy something to impress others, remember that it is your money. Think if spending so much is really worth it or not.
# Keep a budget. Always. Whether it is for buying that phone, planning the night out and giving presents, always have a budget in mind. Many people feel embarrassed to speak of their budget. Do not be ashamed. Finacial experts and wealthy people always have a budget and are afraid to follow that. Even many shops and sellers will appreciate if you have a budget because it makes their work easier.
# Cut off clutter. Simply let go of unnecessary expenditures and emotional spending. You do not need five shampoos and seven deodorants. Do not buy something because a celebrity is telling you to. Do not buy a soap that promises you the heaven – a soap is just meant to clean and anything fanciful is just marketing. See if it suits you and if you really need it. We are bombarded with advertisements but we have to choose whether we respond to those or not.
# Use reward points. Go for reward points on credit or debit cards and such offers that your bank will provide. These will save you a lot of money in the future.
Related: Five ways credit card fraud happens
# Couples should discuss finances and plan. Many working couples get complacent regarding finances. They jump from car loan to home loan. When the money is flowing in easily we hardly bat an eye on spending. The rules for getting better with money are the same for individual and couples. Make a list, set aside first then spend and all the other things we have said.
# Your education does not matter. The shocking truth is that your grades and education do not matter because it has made you any better with money. Reversely, it may have put fear and insecurity. Financial education does not mean knowing about commerce and investing. A person who has a simple business selling in the street may know more about money than an MBA. True financial education starts with building assets and cutting off unnecessary expenditure. Educate yourself about the basics of money. Talk with your friends. Have a desire to be better with money and you will learn in time.
Best money advice from Warren Buffett
Who better to give you advice on money that one of the richest men in the world? Here are some sayings by Warren Buffett that will show you how to be successful reading money.
There seems to be some perverse human characteristic that likes to make easy things difficult.
We started with this. This is easy, keep it simple. A little bit of discipline to us in the start will give long term good results. Just read and follow these simple tips again and again.
Price is what you pay. Value is what you get.
Like we said earlier, do not buy an expensive smart phone because it is in vogue. See what suits your budget. Do not buy because of a celebrity who says he uses it. You will pay the price to buy it but the celebrity gets money. You have to decide what the value of your money is and it should not be compared with others.
Risk comes from not knowing what you are doing.
That is why they say ‘Please read the documents carefully before investing’. Right from investing to buying that shampoo, know what you are doing. Just pay attention, to yourself.
It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.
Be open to learn new things otherwise it is impossible to get better with anything in life. It also requires humility to accept that you do not know. Have some clarity in your life and spend time with people who would make you better – whether it is handling money or life. The formula is the same. Frustrated and toxic people do not have any sincere desire for getting better and do not like it if others get better than them. Avoid them, period.
The company you keep decides your future.
In the business world, the rearview mirror is always clearer than the windshield.
Promises are twenty to the dozen in the market whether it is mutual funds or cosmetics. A little research before you go for it will save you a lot money and energy. See what people say about it, read the reviews. This is one of the biggest benefits of the internet age that you can access opinions all over the world. Use it for yourself.
It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.
Business owners should know exactly what this means. Even as an employee reputation is important. Do not jump into a money decision. Think wisely take time. It is your hard earned money through time.
The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.
Simple behaviour makes life easy. To be good at math, you do not need to know calculus – simple addition and subtraction is what you need. Keep a list and mind what goes in and comes out and you will get better at money.
Honesty is a very expensive gift. Don’t expect it from cheap people.
A timeless saying. But what we miss here is that we are not honest to ourselves. Ask yourself ‘What do I need?’ instead of seeing what other people possess and what their lifestyle is.
The difference between successful people and really successful people is that really successful people say no to almost everything.
Say no to stuff you do not need. Say no to products that sell you fear and insecurity. Say away from stupid people who would spend hours on vanity and none on self development. The richest people like Bill Gates, Richard Branson and Warren Buffett are continuously saying no to things they do not need. Facebook’s owner Mark Zuckerberg wears the same coloured tee shirt. Warren Buffett stays in a modest house for the last four decades. They live well and do spend, but on their terms and not what others expect them to do. And the truth is they all started small, from almost nowhere. It was not hard work that took them to the top. It was their practical knowledge on how to be better with money and let it work for them. You can do it too.