While saving and reducing expenses are two steps towards improving your finances, it is also important to recognise some habits you need to break to gain financial freedom.
There are basic every day habits you may not be aware of that can help improve your financial mindset, and help you gain a healthier, wealthier financial future.
What is financial mindset?
Having the right financial mindset is crucial for living a happy, wealthy life. But wealth is not always accumulated just by financial earning. It’s also about finding and using the right financial steps that will help with exponential growth as well.
In simple words, it’s about respecting the money you have earned, to grow it into wealth. A mindset to delay the present expenses and trust the time value of money for re-investment – this is called ‘the financial mindset’.
Financial freedom is not a magic pill and normally requires years of a disciplined lifestyle to achieve it. However, there are some ways you can quicken the process in the beginning to help get you started, with a few lifestyle changing hacks.
1. Not investing / Investing.
Keeping money in the bank may be the safest place to store cash but the reality is that inflation will be decreasing the value of this cash annually. However, if the stock market is too daunting take baby steps and download an investment app that will do it instead. Financial investment apps such as Raiz will automatically invest spare change into a diversified portfolio, or look into creative options like investing in art.
Have a second income source:
A second income source has become a necessary evil. Having one ensures that you don’t bank on just one source and use the other to cover the menial expenses. You can jump into stock markets & reap the benefits of the volatility associated with CFD trading or invest into alternate investment options.
2. Paying yourself last
Paying for the groceries, rent and bills first can leave X savings completely empty which is why it is important to pay yourself first. This very simple but effective financial strategy means that as soon as the money comes into your bank account a percentage of it goes into your savings account.
3. Shopping without planning
Going on a quick shopping trip can end in a whole lot of unplanned spending but the simple task of making a shopping list could be the perfect financial solution. Creating a shopping list before going out to shop can prevent impulse buying as well as keep the focus on buying what’s actually essential.
4. Eating out regularly
It is well known that cooking at home saves more than ordering out but the temptation to try out that new brunch place may just be too much. Instead of being deprived from the joys of trying a new dish, balance out eating out with other priorities to ensure you stick to your financial budget.
5. Putting of till tomorrow
Putting off cancelling an unused subscription plan could end up adding up to a lot more than expected as Australians spent a whopping $390 million on unused subscription fees in 2021.
It’s important to create a daily financial to-do list. By breaking larger tasks up into smaller parts they’re much more feasible and easier to do every day.
6. Not knowing where the money goes
Life can get hectic and it’s not always to keep track of expenses, but finally taking a look at the bank account can bring a fright.
There are various ways to keep track of expenses, and one of them is to have a separate spending account where money is deposited for everyday expenses. Another easy way is to have a financial app track it, the most popular app on the market is mint.intuit.com which is free and can be personalised. Check out this piece on finance myths you should all let go of.