Hey there! Paul from Aquila Legacy Group in Renton, WA.
Starting off the new year of 2023, every individual should be focusing on bettering their financial situation and establishing good spending and savings habits for the year. Here are 3 financial habits that can help you start the new year off on the right foot:
1. Make a budget and stick to it. The best way to effectively manage your money is to create a budget and limit your spending. Establish a set budget for yourself each month, taking into account all necessary expenses like rent, food, and other utilities. Set aside some funds for discretionary spending and try to stick to it as much as possible – impulse buys can eat away at your carefully crafted budget.
A budget is the map of your financial goals and it gives you a clear idea of how to manage your income, expenses as well as your investments and it also lays out the path that needs to be taken to reach your financial goals. Understanding your income and in turn, your spending and saving habits is the essential foundation for setting up a sound budget. A sink or swim approach could prove to be counter-productive in the long run and a budget will therefore help put your finances on the right track. By tracking your budget, you will be able to see where your money is going - both mandatory and discretionary spending - and how your financial decisions affect the course of your future.
2. Automate your savings. If you’re used to relying on yourself to remember to move funds from your checking to savings account each month, you’ll find that automation solves that issue. Most online banks allow you to set up automatic transfers from your checking account to your savings account on a weekly or monthly schedule. You can also set up a direct deposit from your paycheck or an automatic transfer from one account to another. This will help ensure that you’re putting aside money each month, even when you’re busy or forgetful.
Saving a small portion of income every month on a regular basis helps to build a sound financial future. Whether saving for a house, business venture or retirement, saving regularly helps to move towards one’s financial goals. One of the most effective, and perhaps the easiest, method of saving is to set up a direct debit system, which withdraws the allocated amount from your bank account each month before you can even miss it, so you’re almost unaware of it. Apps like Chip and Cleo also use Artificial Intelligence (AI) to analyse your spending habits and round-up your transactions and deposit the difference into a savings account, thereby allowing you to build savings over time.
3. Invest in yourself. Investing in yourself can include anything from taking a class to improving your skills, or saving for retirement. Investing in yourself – whether it’s in your career, hobbies, or education – helps make sure you’re headed in the right financial direction. Investing in yourself also has added mental benefits, as studies show that investing in yourself makes you feel more satisfied and content with your life.
Investing your money is the key to building true wealth and it is something to be done in the long term. Different investments come with different risks and potential rewards, but the most important point is to start investing. It is important to understand which type of investment asset class fits your needs and also to research potential investments and plan for the long-term. Investing is about taking risks, but also about minimising further risks. If you do not feel secure in making your own investments, a wealth manager or investment specialist can help manage your investments and offset any risks associated with investing.
By following these three steps of budgeting, automating your savings, and investing in yourself, you can set yourself up for a successful and financially secure 2023. Not only will your bank account be happier, but so will you by taking control of your finances.