As inflation, the energy crisis, and the general market conditions tighten all our budgets, managing your money has never been more important. Whether you’re looking to save more each month, invest 5% of your earnings, or if you’re building your rainy-day fund, being money conscious is essential. There are many ways you can improve your money management and make those dollars reach further – here’s our dollar-stretching tips to get you started.
1. Define your financial goals
What are your plans with money? Why do you want more money? Whether it’s for short- or long-term goals, for big purchases or just to face inflation, it is important to know what your financial goals are so you will keep your mind motivated. It’s like the gym, a marathon runner and a football player will not have the same training plan! Focus on your own financial course.
2. Educate yourself about money
3. Budget, budget, budget
Budgeting is very important as it helps you to prioritize your expenses and set limits so you don’t spend more than you should. A simple rule of budgeting that you could apply is the 50/30/20 rule, where you split 50% of your income for your current needs (rent, internet…), 30% for entertainment (restaurants, outings…), and 20% for your savings. Depending on where you are in your life, this split may look different as your priorities change – that’s okay and expected. What’s important is that you are aware and intentional with your budgeting.
4. Save that money
Your savings can serve as an anxiety buffer and spare you from some financial stress when emergencies hit. This is also known as a rainy day fund and it will allow you to face unexpected expenses such as a birthday you forgot, a medical bill, replacing a broken laptop. Savings can also help anticipate more long-term expenses like down-payments and retirement.
5. Then invest that money
Imagine earning money through your savings. Passive income is an essential part of retaining purchasing power, beating inflation, and growing your wealth. Investing can begin at any age based on your financial situation, but the earlier the better. The key with investing is your time in the market, not timing of the market.
6. Track your expenses
Tracking your expenses is closely tied to budgeting. It helps you to know where your money goes, if your spending is aligned with your financial goals, and if you’re sticking to your budget. Having the full picture of your expenses can help you assess where you can make some adjustments and where you’re doing just right! A good way to track your expenses is budget planner – one app we really like is Mint but there are plenty of options out there.
7. Consume consciously
When you want to purchase something put it on a 30-day waitlist. Testing your ‘want’ for something over 30 days helps avoid impulse buys and increases the intentionality of your spending. You can also experiment with the secondhand market for refurbished and rehomed items (think Buffalo exchange, Depop, Vinted, refurbished phones etc). Basically, you can buy the same products for less money and reduce consumer demand on the planet.
8. Know your needs
From fashion magazines to TikTok trends, thinking you ‘need’ something when you really want it is no new battle. It is very easy to get sucked into impulse purchases, but it’s important to think about how these things align with your personal values and financial goals. Of course, enjoy yourself and have fun – always set aside money for your fun-time spending but check-in with yourself about your current and future needs before splashing the cash.
9. Be patient and flexible
It takes 30 days to create a habit, and that goes for changing a habit too! Making improvements to our money management can take time, and often the results take time to see too. Be patient and trust that the actions you take today are beneficial for your future self. Maintain your commitment to your financial goals and adjust them if you need to along the way. Just as your situation changes, your financial goals will as well, which is completely normal. Being in tune with your financial goals, spending habits, and your preferred lifestyle will help you stay on track and feel confident in making financial decisions.
Footnote 1: Content is for informational and educational purposes only. Any views, strategies or products discussed may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. The information contained herein should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. Investors should carefully consider the investment objectives and risks as well as charges and expenses of a mutual fund or ETF before investing.
Footnote 2: FLIT Invest does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.