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Changing your financial beliefs and behavior

Written by Salomé Nel

We often have huge expectations about what we should be doing and how we should be living or lives. This is also influenced by people around us. If you have a big friend circle, you probably have a very busy social life, which means that you spend a lot of money on social gatherings, braai’s, etc. Same goes for when you have children.

All of these are affected by our relationship with money, which are influenced by five factors:

  • Family
  • Friends
  • Work
  • Health
  • Culture

What clothes we should wear. What car we drive. What kind of job we should have – these are different to everyone. But our social environment effectively affects our spending behavior.

Keeping up with the Jones’

Living a lifestyle to suit others, and ultimately being a people pleaser, will have a negative effect, which will cause unnecessary stress over the long term. Yes, we all want to be liked by others, but is it really worth it?

Changing your behavior is not easy, but I promise you it will be worth it.

So now you are asking: “But how?” Let me show you in a few easy steps:

1. Make a budget

The best way to cure bad spending habits, is to set up a budget and track your spending. You will be surprised how much you spend on non-essential items! It will keep you honest and force you to make tough decisions in advance about what you can or can’t afford. It will be easier to cut back on your spending when you see the numbers in black and white.

2. Evaluate every purchase

Impulsive shopping without thinking are common habits that lead to overspending. Before you buy anything new, delay the decision for a day and evaluate the new purchase.

Do you really need that new wardrobe item? Can you borrow the tool from a neighbor or use another tool you already own? After this evaluation, you may decide not to make the purchase after all.

Also, when you do go shopping, make a habit of making a shopping list and only buying items on the list. That will keep you from in-store impulse buys.

3. Check your bank statement regularly

If you have a high number of transactions going off your bank account, it is easy to miss small transactions or fees. Going through your bank statement regularly, can help minimize small unnecessary amounts being debited from your account. Remember, small amounts add up to big amounts over time.

4. Plan your meals

It is very easy to overspend on meals, from dining out to buying groceries. A smart money habit is to track your food expenses and take a hard look at where you can save.

Meal planning is one of the best ways to keep grocery bills to a minimum. You’ll eliminate food waste because you have a plan for all your purchases and can buy your most-used ingredients in bulk.

It is also important to have a “treat night” once a month, where you cook off menu or budget for a restaurant meal. Not only will you breaking your poor spending habits, but you’ll be eating healthier as well.

5. Reduce luxury beverages

Do you visit Seattle Coffee on a regular basis on your way to work? Or go out for a glass of wine of coffee with friends regularly during the week? These “luxury” beverages cost a lot and adds up over time.

Brewing your own coffee and tea is cheaper than buying it from a cafe. (Don’t forget about free coffee at work!) Also, limit alcohol consumption to weekend dinners only or special occasions. We don’t miss it and the savings in our annual food budget is significant. When you must buy it, look for sales and specials.

6. Pay yourself first

Many people struggle to save because there’s no money left at the end of the month to go into a savings or investment account.

After you’ve set up a budget, you’ll be able to see how much you can allocate towards savings. Now set up a debit order for these funds to automatically be transferred into a savings account or investment

It is important to build up a safety net for unexpected purchases. Ideally 3-6 months of income. But don’t let this amount scare you. Remember, something is better than nothing!

7. Set short- and long-term saving and investment goals

Set smart short- and long-term goals for yourself and write them down! When you set yourself goals, and you are able to tick them off, you will feel more determined to stick to your plan.

8. Find an accountability partner

Making changes are always easier if you have someone that keeps you accountable. Find a friend, or a reputable financial advisor, that will help you stick to your goals.

Then lastly, don’t try to make these changes all at once. This might overwhelm you and then it will be more difficult to make positive changes. Set yourself a goal to make one change per month, and in a year’s time, you will see a big change in your spending habits.

Remember, small steps will help you to achieve big goals.

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