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Do you want to boost your bank balance and reduce debt? Well, quit tapping!
We’re so used to tapping our smartphone, swiping our credit cards, and popping in our pin numbers that we’re all losing our connection with money.
After all, it’s incredibly easy to spend money that’s practically invisible. And we’re all guilty to some degree. But if you’re serious about saving then mindlessly waving your card around is not the way to go.
You need to rekindle your connection with cash.
Set a budget, and then give yourself some pocket money. In cash. This way, when you’ve spent it, you’ve spent it. And there is no more.
I guarantee that if you did this for six months, you’d see a big difference in your bank account. There’s something powerful in the psychology of actually taking cash out of your wallet to buy something. It definitely makes you think twice about what you purchase.
And some stuff, you will no doubt, decide to leave behind in the store.
We all love the cards, they’re so convenient. And they’re fantastic in an emergency. But they can be a trap if you’re trying to get control over your finances.
Credit cards especially have high interest rates. They’re one of the most expensive forms of debt.
If you spend without thinking too hard about it, you can soon rack up debt that’s difficult to pay off at the end of the month. Usually, the end of the month – the payment deadline – is when the fees and charges and interest kicks in, and if you’re not careful you can end up paying more for what you purchased in the first place! Keep in mind that if you’re only making the minimum payment, you will then pay interest on the interest you didn’t pay last month, and if you continue to only pay the minimum required, you are then paying interest on the interest, on the interest!! Your debt can escalate very quickly if you’re not mindful of your spending and just keep adding to it until you reach your card limit.
Knowing exactly what is coming in, and exactly what is going out – what you are earning and what you are spending – is the only way to control your finances. Without this control, you are living your life like a twig in the current, being constantly buffeted against the rocks as you get carried down-stream!
When you understand what your income and expenses are, you can save.
Let’s face it, it’s pretty unlikely that you’ll get a whopping pay rise, an inheritance, a lotto windfall or some other big financial boost any time soon. So, essentially, you’re managing your life with a ‘fixed’ income.
So, if you want to save more, you need to cut down your expenses. It’s the only way. Because you might have a great job, a solid career path, be earning good money, and have the potential to earn more, it is very easy to become mindless about your money. If you spend every last cent, or more, each pay day, then you’re as poor as someone on the Job Start allowance, trying madly to make ends meet.
Life is for living. Friends are for fun. But money makes the world go around. And if you don’t have enough you soon feel it.
Putting healthy money habits in place as soon as you start earning will help you throughout your entire life. And this is important, because as your financial circumstances change for the worse or the better, you’ll know exactly how to stay in control.
This is general advice and should not be treated as personal advice. Julie Nipperess is an authorised representative of Step Up Financial Group Pty Ltd ASFL No: 512509.