Many things can impact your financial world. But mostly it’s you. Winning with your money is only about 20 percent knowledge. 80 percent of your success will come from your behavior with money.
Your financial wellbeing is directly affected by how well you are able to manage your money and plan for the future. Each activity and decision can affect your future.
With that in mind, there are several ways to make the most of the income you do have.
Consider Your Existing Assets
You may not realize what you already have at your disposal. So think about the assets you have and how you can use them to your advantage.
For example, if you have a checking account, it may not earn as much interest or any interest at all. So, you might want to keep as little as possible in your checking account and put the rest of the money in a higher yield savings account. You can find the best ones of those online.
If you want to get really creative and have a life insurance policy, you might be able to take advantage of its cash value. You can sell it through a life settlement and put the money into investments. If you are thinking of going this route, make sure to review a guide on everything you need to know.
Reducing Lifestyle Inflation
It’s easy to spend more money as you have it. Lifestyle inflation refers to increasing your cost of living as your income increases, rather than putting that extra income into savings. If you have found ways to make extra money, it’s easy to be tempted to spend more money on things like cars, transportation, clothing, and other things.
You may be able to afford these things, but lifestyle inflation is something you should avoid since it can damage your financial health. It prevents you from accumulating wealth since each dollar that is spent now is one less that you can have during retirement.
It can be tempting to try to keep up with neighbors or friends who appear to have it all. If others you know have expensive cars, dine out a lot, or go on exclusive vacations, you may feel you need to do the same in order to feel wealthy. However, what might not be as apparent is that people who do these things often have a lot of debt since they can’t really afford them either.
Related Content: 5 Life Changing Moments that Lead to Lifestyle Inflation
Consider Needs and Wants
It’s best to consider the differences between wants and needs so you can make better choices on how much you spend.
For example, needs include things like housing, food, transportation, healthcare, and basic clothing. Those items should be the foundation of any budget.
But you may include savings as a need to make sure you prioritize this each month. The wants category includes things you would enjoy having but do not require. For example, vacations, pets, and nice things for your home might be included in this category.
Related Content: How to Prioritize What’s Important When You Make a Budget
Plan on Saving Early
You have likely heard that it is never too late to up your savings, whether it’s starting an emergency fund or setting aside money for retirement. This might be true, but it’s best to start as soon as you can.
This can help you be much better off while you are retired. That’s because of compounding interest. This is because the interest you have already earned is reinvested, increasing the value of your investments. And you will end up with a larger nest egg once it is time to retire.
These are just a few of the strategies to help you win with money. But again, it’s more about your behavior than anything else. If you are not doing the right things, you will continue to struggle.
Leave a Comment or Answer a Question Below: What other strategies have helped you budget? Do you have a problem saving money? If so, what do you think the problem is?
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