Many of us struggle financially because we live beyond our means. Indeed, the average American has nearly $93,000 in personal debt.
While debt has become a reality for most people, it can really cripple a person. In extreme cases, it can lead to bankruptcy. That’s why it’s best to get your finances under control as soon as possible. But when your debt keeps growing, how do you decrease it? The answer is with better money habits. Here are some tips that can help.
1. Live Within Your Means
The concept is simple: spend less than you make. However, many of us find it hard to apply this rule. The biggest reason is impatience. We live in a society that wants things to happen right away. We don’t want to save up for something we really want; instead, we’ll slap it on a credit card or apply for an expensive car loan. It’s especially hard when we see other people with fancy cars and clothes. Instead, be content with what you have and stop spending money to keep up with others.
2. Track Expenses
An excellent way to see exactly where all your money is going is to track it. Use a spreadsheet to enter every expense in your household, no matter how small. Spent $5 on a coffee? Log it in your spreadsheet. You’ll soon get a good idea of where you can cut back. Plus, this can help you create a budget.
3. Make More Money
One of the best ways to pay off debt is to make more money. If you can’t earn any more money at your current job, it might be time to get a second job or a side hustle. Lots of businesses are hiring right now, and many people work from home doing computer jobs. You could even start your own business. If you have the time and the drive, there are many opportunities available.
4. Avoid Temptation
Advertising is everywhere—on the TV, radio, online, and in the newspaper. You’ll see signs and billboards during your commute. It seems as though everyone is trying to sell you something. A good money habit is to just ignore it. A lot of people buy things on sale because they get them at a discount, so they think they saved money. However, a sale doesn’t save you money unless it is something you needed in the first place. When you buy something on sale, make sure you need it.
5. Pack Your Lunch
If you work outside the home, going out to eat every day can add up. Even if you spend just $5 each workday, that’s $25 a week. That amounts to $1,200 a year. You can save money by bringing lunch every day. Packing your lunch makes you more aware of what you are eating. A daily trip to Starbucks can also add up, so bring coffee from home as well. It’s often these small, recurring costs that can impact one’s budget most.
6. Open a Savings Account
Saving money is always a good money habit, but it seems impossible to many. With automatic transfers, it’s easy—you can get money deposited into a savings account regularly. Plan to have a portion of each paycheck go into a savings account. Even if it’s just $20 every two weeks, it’s better than nothing. When you get a raise or come into a lump sum of money, put it into your savings account and watch it grow.
7. Set Goals
What do you want to do with your money eventually? Travel? Buy a house? Save up for retirement? It’s easier to pay off debt and start saving when you have goals in mind. Be as specific as possible. Simply wanting to be rich isn’t good enough—how much money do you need to be rich? A realistic goal will help you make an impact on your finances.
Contact Us Today
It’s never too late to develop better money habits. Start paying off debt and living within your means. A loan from Lift Credit can help you out of a tough financial spot and get you back on track. Could you use some extra funds? If so, apply for a loan from Lift Credit today.