Although a high-paying job or a six-figure inheritance could land you in the top 1% of earners, it is the little things that actually make all the difference between living a life full of constant financial stress and one of prosperity – your money habits. And since personal finance is not something that most people are taught in school, most of them never learn anything about money before they start handling them, which truly is the recipe for a financial disaster. For that reason, I’ve gathered a few tips to help you make the best use out of your income and make money work for you. Time for increasing the number of your fun coupons.
Follow the 50-20-30 rule
Not all money you earn go to your pocket. As a part of this society, you have an obligation to pay taxes. Once you take care of them, divide your take-home money into three main categories: essentials, lifestyle and future. This means following the well-known 50-20-30 rule where 50% of your money go for your must-haves such as home, transport, utilities, groceries. The other 20% should go to a retirement fund so once you reach your retirement age you can enjoy your personal super contribution. And last but not least, you should spend not more than 30% your lifestyle for matters such as travelling, shopping, getting a gym membership, etc.
Focus on your future
The reality is, the younger you are, the less you think about your retirement. However, that’s exactly the right time for you to think about and take care of your future financial status. Thinking about your 60s is one of the best financial decisions you could make in your 20s. One of the most popular ways to save for retirement in Australia is setting up a Self Managed Super Fund (SMSF). The popularity of this fund is due to the huge benefits it offers to its members giving them the opportunity to enjoy their personal super contribution. With an SMSF you have full control over the super and investment strategies and you are the only responsible for your financial decisions.
Make it automatic
I know that shopping with a credit card is more convenient than buying with cash, but from a financial aspect, it is not the best decision when it comes to saving. This way you don’t physically see where your money goes, which could badly affect your ability to see just how much you’re spending. You can still shop with your credit cards but you can do this wisely just by setting up a monthly transfer of 15-20% of every paycheck. This way you can be sure your saving account receives a stream of money on a monthly basis.
Create a $1,500 “Walk Away” fund
No one wants to depend on someone. So, if for some reason you need to leave your home, your partner, or your job, having your own savings will put you in a position of power. This way you will have your own budget to survive a couple of months on your own until you find another job or rent a new home.
Indulge in the little things
Sometimes the biggest pleasures in life come from the small things. If having your morning coffee in your favourite local coffee shop is what makes you happy, do not give up on this habit. According to financial experts, cutting money on something you enjoy spending on could backfire. However, if you still want to cut off some of your expenses on small pleasures, then make a list and choose the one that you enjoy in the least and delete it from your routine. For example, if you’re paying for a gym membership, but you only go there to run on the treadmill once a week, cancelling your membership would probably be a good idea. You can always run in the park and reap the benefits of breathing some fresh air while doing so.
Ask for a raise
According to some statistics, nearly 20% of the female population have never negotiated their salary. Even those who have negotiated for a raise, have not asked for much. Make sure to highlight all of your commitments and contributions to your company and do not hesitate to ask for a better compensation for your hard work.