Making Smart Financial Decisions is Easy – Here’s How
None of us were born with the innate ability to make sound financial decisions. But most of us know the art of exuberantly shelling out our hard-earned money on unnecessary things.
Designer clothes, the newest car models, fancy gadgets – you name it. And we often do this without even thinking twice.
Have you ever paused and thought about all you could do with the money if you weren’t wasting it so frivolously?
If you had started saving early, you could have bought your dream house or traveled half the world by now. But we often don’t think about these things until it’s too late.
Making smart financial decisions is not as difficult as it may seem. You need to be a little more mindful about your spending habits and cut back on unnecessary expenses.
Here are a few tips that’ll help you get started:
1. Evaluate Your Current Financial Situation:
Managing finances is especially important if you’re living in an expensive country. Let’s talk about the world’s second most unaffordable city – Sydney.
It’s no secret that the cost of living here is sky-high. The cost of living comfortably can touch $2,400 to $3,700 per month.
First-time homebuyers need to save for ten years only to save up 20% deposit to purchase a home. And that’s not even enough to get you a decent house in the outer suburbs. If you want to live closer to the city, you’ll need to start saving much earlier.
That’s why it’s essential to be aware of your current financial situation and make necessary changes to ensure a comfortable future. You can contact the best financial advisors in Sydney for more guidance.
2. Set Saving Goals:
We want to achieve a list of ‘goals’ in our lifetime – buying a house, traveling the world, and starting a family.
But we often forget to factor in the costs associated with these goals. And as a result, we cannot save up enough money to achieve them.
Start by considering making a Tax-Free Savings Account (TFSA). It will help you save money for specific goals such as buying a house or taking a luxurious vacation. You can even use it for retirement planning.
Another practical saving tip is to ensure you have enough insurance coverage. It will help you protect your loved ones financially in case of any unforeseen circumstances.
Writing a will is also crucial to avoid any legal complications for your family in the future. It will help them settle your affairs quickly and without any hassle.
3. Start Saving Early:
One of the most important financial decisions you’ll make is to start saving early. Penny by a penny, day by day, year after year – it all adds up. And pretty soon, you’ll have a decent amount saved up to help you during tough times.
Student life is the perfect time to start saving. You can open a savings account and have a fixed amount transferred from your checking account every month. It will help you get into the habit of saving, and you won’t even miss the money that’s being transferred.
Time is one of the most critical factors for saving and investing. The sooner you start, the better. Saving early will also help you in the long run as you’ll have more time to let your money grow.
Related Guide: 6 Good Reasons Why You Should Open a Savings Account Today
4. Create a Budget and Stick to It:
Adulthood gets lost between juggling bills, EMIs, and trying to make ends meet. But it’s crucial to have a budget to ensure that you’re not overspending.
Start by evaluating your income and expenses. Make a list of all your monthly payments, including necessary and personal ones.
Once you have a clear idea of where your money is going, you can start cutting back on unnecessary spending.
It’s also important to track your progress and see if you’re sticking to your budget. Various apps like Mint, PocketGuard, and Prism can help you do that.
5. Stay Out of Debt:
Debt eats into your savings and can hamper your financial goals. Sure, you might need to take out a loan for your education or buy a house. But try to steer clear of credit card debt and other high-interest loans like payday loans.
Focus on your most expensive debts first and try to pay them off as quickly as possible. You can also consolidate your debts to get a lower interest rate and make monthly payments more manageable.
Paying out more than the minimum amount every month will ensure you’re out of debt sooner.
It only indicates one celebratory step closer to your financial freedom! You’ll have more money to save and invest, and you’ll also be able to sleep better at night.
6. Do Your Research Before Making Big Financial Decisions:
You might be considering a big purchase, like a car or a house. Or you might be thinking about taking out a loan to consolidate your debts. Whatever the decision is, make sure you do your research before making it.
A hasty decision can end up costing you more in the long run. So, take your time, weigh the pros and cons, and only decide when you’re sure it’s right.
You can also talk to a financial advisor to get unbiased advice on whether or not a particular financial decision is right for you.
7. Keep Learning:
Staying updated on the latest financial news and products will help you make better decisions with your money. There are plenty of resources available, including books, websites, and podcasts.
You can also attend workshops and seminars to learn more about personal finance. And if you’re not sure about something, speak to a professional.
For instance, you must understand how the price-to-earnings ratio works if you wish to buy stocks. Or, if you’re thinking of taking out a home loan, you need to know about the different interest rates and repayment terms available. A stockbroker or a financial advisor can help you understand these concepts.
8. Stay Married:
Don’t brush it off as an old wives’ tale – staying married can significantly impact your financial health.
For one, you’ll have two incomes to save and invest. And you can also share expenses, which will help you save money. You’ll also be eligible for certain tax benefits if you’re married.
Another considerable benefit is owning twice as many assets. If you’re married and own a house, both you and your spouse will be entitled to half the property’s value in the event of a divorce.
So, if you’re thinking about tying the knot, remember that it could positively impact your finances. Of course, being married isn’t always easy, but if you can work through the tough times, you’ll be better off financially in the long run.
Conclusion:
Making small tweaks in your lifestyle can go a long way in helping you save money. You will win half the battle if you can curb your expenses and stay out of debt. And if you’re married, you’ll have a partner to help you with your finances.
The most important thing, however, is to stay focused. It’s easy to get sidetracked and make impulsive decisions with your money. But if you keep your eye on the prize, you’ll be able to achieve your financial goals.
Read Also:
Share this article:
