Improving your relationship with money

Improving your relationship with money

In order to build a healthy relationship with money, it’s worth spending a little bit of time assessing your current financial situation and then creating a plan of attack. To help with the plan, here are 8 tips that will simplify the way you think about and deal with your finances. We hope this will help with improving your relationship with money.

Knowing you are financially protected will help to reduce stress and improve how you perceive your finances. Sometimes it’s all about the small quick wins that will bolster the larger financial commitments we need to face in the future.

1. Create a plan for your finances

It’s the same for everything, when you have a plan in place, it’s easier to get to where you’re trying to go. Figure out how you intent to pay off your debts, your pension, bulk up your savings or even putting money aside for personal goals.

Once you’ve got your goals set out in stone, you need a plan to achieve them. A good place to start is to determine how much each goal will cost and then how much time you will need to reach that goal. Not to mention, arrange your goals in terms of priority to save stress!

2. Be aware of your credit score

Set a reminder on your calendar to check your credit frequently. It’s important to understand what your credit score is and what your credit report is like. You want to make sure that all the hard work you will be doing with improving your relationship with money isn’t impacted by inaccurate reporting.

Here’s an article indicating the 6 best free credit reports by balance.

3. Pay your debts

Whether you’re battling a high credit card balance or a bank loan, debt can make it more difficult to keep up with day-to-day expenses and savings. Here are some of our tips for debt management:

  • Pay off your debts as soon as possible – research the avalanche method.
  • If you’re worried about your credit card debt, get in touch with your creditors to ask if they can lower your APR (interest rate).
  • Begin mapping your debt-payoff goals with amounts and timelines to help you track your progress and to stay on plan.

4. Set yourself goals

You probably have a few goals that money will help accomplish… so setting goals to help with improving your relationship with money will in turn accomplish those personal goals. Setting goals gives you something to work towards.

When you set goals, keep in mind that you want them to be measurable and achievable! There’s no point setting yourself up to fail with unrealistic goals, it will only falter your motivation in the long run. You will want to break your big goals into small, easy to digest chunks so that you don’t overwhelm yourself.

A great place to start is to focus on creating 1% difference every day. Our ideas:

  • The 1p saving challenge. This is a 52-week saving challenge where you save an increasing amount per week for each week of the year. You start by saving 1p on day 1, then 2p on day 2 and etc. When following this plan, by the end of the month you will have saved around £4.96 and by the end of the year, you will have saved £667.95. If you’re interested in this challenge, SkintDad will give you all the information plus a downloadable plan to keep you on track!
  • Cut down on unnecessary daily expenses. If you usually head to Tesco’s to get a meal deal on the daily, that’s an added £3.50 that you’re spending, when you could take 5 minutes out of your evening to make yourself lunch, using the food that is already in your fridge. Not to mention brewing your own coffee at home and taking it in a flask rather than spending up to £4 on one from Starbucks.
  • Try paying for day-to-day expenses with cash. Evaluate your expenses and determine the spending categories to see if you are able to switch to cash-only payments. Debit and Credit card payments are more likely to tempt you into making impulsive purchases, whereas cash will help you to stay on budget because you can’t spend money that you don’t have.

These are just a few of our ideas to create daily goals for yourself and to stick to them.

5. Evaluate and track your spending

Start by documenting what you buy, where and sort them into categories to gauge your spending habits. Tracking your spending will allow you to get a clear mind on where you need to make changes. Schedule a time and a day each week to compare your actual spending against your budget to avoid overspending.

6. Adjust your shopping habits

The easiest way to mess up your budget, is to go shopping without a plan or a list. You will go into a shop without a care in the world, pick up a few inexpensive items without realising how quickly those small costs add up at the end. So, to make it easier on yourself, make sure you always plan what you’re going for, make a little shopping list of what you need, this will make it more likely for you to stay on budget.

7. Automate

You’re probably wondering what automating has to do with improving your relationship with money… well, studies show that people who automate their savings save more than those who don’t! This is because they stay consistent with their deposits and outgoings.

Think about it, if the funds have already been automatically assigned to your savings accounts, soon enough you will get used to not having that amount in your account, which means more for your savings!

8. Save money in the future

Whether it’s buying a new car or saving for a big holiday, these types of big financial dropouts can often impact your bank for months or even years. So, here are a few of our money-saving tips to make more well-informed choices about where your earnings go!

  • If you’re looking to book a holiday, instead of relying on overpriced holiday packages that convince you are a bargain… visit apps such as Airbnb or other lodging rental sites to find places to stay when you’re planning a trip!
  • Consider buying a more fuel-efficient car next time you need a switch up!
  • Make sure you always keep warranty certificates up until it runs out on new appliances in case it breaks down within the insured time period. (This could end up saving you hundreds or even thousands)
  • Choose your bank account carefully! Having a high interest bank account will allow your account to earn more money over time. Online banks tend to offer the higher interest rates.

And finally, but by no means least, changing your money mindset . Changing your perception of how you manage your money is about understanding what you need verses what you want. And there is power in controlling that. Keep yourself motivated by keeping a diary, reading inspirational books on the subject, getting a mentor, or even watching motivational videos or listening to podcasts.

We hope this will give you some ideas on improving your relationship with money! With Christmas coming up in the next few months, we understand how stressful this can be on your bank account… so if you’re at all interested in ways to keep you on track, check out our blog “5 easy ways to save at Christmas!” for ideas!

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