When you want to learn how to be smart with money you should know that it’s not about the lack of money in your life, but rather how you handle it.
The best way to make good money decisions is by practicing smart habits and getting smarter each day.
One of the smartest things you can do in order to achieve financial success is to change your relationship and use of money. Instead of seeing money as a means to an end, start viewing it as a tool that can help you reach your goals.
When you have this mindset, you’ll be more likely to make smart money decisions that will help you get ahead financially.
1. Set financial goals
When it comes to your finances, you first need to set some financial goals. Financial goals can help you stay focused and motivated as you work to improve your financial situation. Some things you may want to consider when setting your financial goals include:
Your income
What is the minimum income you need to be content? How much money do you want to save each month? What are your long-term financial goals? Once you know what you’re working towards, it’ll be easier to make smart decisions with your money.
Your expenses
Are your expenses aligned with what you want to achieve in the future? Are you spending all your money now meaning there is none to save towards a brighter future? Doe you spend everything you earn?
Evaluating your current expenses and determining which ones are a necessity and which ones can be reduced or eliminated altogether helps you to see your financial situation now and the potential for your future.
Tackling your expenses and reducing some of them will help you free up more money to save and invest for the future.
Your debt
If you have debt then it’s no secret that your top priority goal should be to get rid of your debt. List out your debts and their interest rates, then create a plan to pay them off as quickly as possible.
Having the goal to clear all your consumer debt (not mortgage) will help you stay motivated and help you see how you can more easily achieve your other financial goals once you are debt free.
Create a retirement account
Start by thinking about what you want for your retirement. How much money will you need to have saved up? What type of lifestyle do you want to live in retirement?
There are many different types of retirement accounts, including 401(k)s, individual retirement accounts (IRAs), and Roth IRAs. In the UK you have SIPPs, Personal Pensions and Workplace Pensions.
No doubt in Canada and other countries you have similar retirement accounts named something else. Each type of account has its own rules and benefits.
It’s important to understand the differences between the different types of accounts so you can choose the one that is best for you.
If you are young and learn how to be smart with money in college then putting money aside for retirement will be a breeze, because you can start sooner than most people do.
Once you have a goal of what you want your retirement to look like, make a plan to achieve it. Save as much money as possible and invest it wisely.
2. improve your credit score
Having a good credit score enables you to get the best rates when you are looking for a mortgage, personal loan and other types of finance. One way to improve your credit score is by becoming an authorized user on a family member’s credit card.
This will help you build your credit history and show that you are responsible with money. In turn, this could lead to a higher credit score and increased opportunities for borrowing in the future.
Another option is to apply for a secured card. A secured card is a credit card where you put down a security deposit. This deposit becomes your credit limit and if you don’t pay your balance, the issuer can take the money from the deposit.
Applying for a secured card can help improve your credit score over time as long as you use it responsibly.
You could also consider using Experian Boost. If you’re looking for tips to improve your credit score, you could also consider using Experian Boost.
What is Experian Boost? It’s a completely free feature of Experian that allows you to connect various accounts like utility and telecoms to your Experian credit report, which can potentially raise your credit score.
It can help you raise your credit score by adding positive information to your credit report from regular payments like utility bills, council tax, Netflix and even Spotify. By linking these bills you can get credit for positive payments made on time.
(This post contains affiliate links. If you click on a link and make a purchase, I may make a small commission at no extra cost to you. As an Amazon Associate I earn from qualifying purchases. You can read more here)
3. Learn to save money
Saving money instead of spending everything you earn is essential if you want to be smart with your money and have more money in the future. If you spend everything you earn or worse, take on debt just to get by each month.
You are going to have financial problems both now and later in life. The ability to save money is an essential building block and one of the golden money rules you need to know. Here are some tips to help you get started with saving money:
Live below your means
One of the most important tips on how to be smart with your money is to live below your means. If you can’t afford something, don’t buy it. This will allow you to save money and invest it in more important things.
Don’t buy things you don’t need
One of the most common ways people waste money is by buying things they do not really need. If you find yourself tempted to make a purchase, ask yourself whether you really need the item. If it is a necessity, buy it if you can afford to do so. However, if it is not necessary, then think twice before buying it.
Cut back on expenses
One way to start saving money is to cut back on unnecessary expenses. Review your monthly budget and see where you can reduce spending without impacting your quality of life. Maybe cancel that subscription service you don’t use or brown bag your lunch a few times a week. Every little bit helps!
Invest in a good savings account
The best way to start saving money is by investing in a good savings account. This will give you a starting point and you can work on increasing your savings from there. You should also make a budget and stick to it so you know where your money is going each month.
4. Set up an emergency fund
An emergency fund is a savings account that you create to use in case of an unexpected event or expense. It can help protect against financial disaster when life throws loss, injury and other challenges your way.
One way to make sure you’re always prepared for the unexpected is to have an emergency fund with at least $1000 in it. The unexpected could be anything from a car repair bill to a medical emergency.
The idea is that you don’t have to borrow money or put unnecessary strain on your budget when something unexpected comes up. You can use the emergency fund to cover those costs without having to worry about it.
An emergency fund is the last thing most people want to think about when they are trying to get out of debt and build wealth. Yet, it is important and a priority even if you have debt.
Setting a realistic emergency savings fund will help you achieve your long-term goals much faster. Starting an emergency fund is one of the building blocks for financial freedom and freedom from money worries.
5. Invest money wisely
Though it may seem daunting, investing is one of the smartest things you can do for your financial future. By investing in stocks, bonds, and other vehicles, you can grow your wealth over time and create a solid foundation for a comfortable retirement.
You don’t need to be a financial expert to get started, but it’s a necessity that you do some research and build your financial knowledge before moving from pure savings accounts to investments.
You can lose money if the markets take a turn for the worse, but only if you panic and withdraw your money. Investing is about the long game, a minimum of 5 years as markets go both up and down.
It’s crucial you do your homework in order to understand investing, risks and how you can minimize them. Do your research before you invest and choose vehicles that match your risk tolerance and investment goals.
It’s no secret that investments are key to achieving financial success. And while there are no guarantees in the investment world, with careful planning and smart investing, you can give yourself the best chance at achieving the future you desire.
To learn about investing you need to build your knowledge of all things financial. That’s where the next tip comes in.
To find out more about investing opportunities, check out hotforex review.
6. Read finance books
Is there a how to be smart with money book? There are many books out there that will teach you about personal finance, but so many of them contain jargon which can be hard to understand and really off putting.
Personal finance is a dry subject at the best of times so when you’re a beginner wanting to find out more, you need books that help and make sense, not send you to sleep!
Reading the right financial books will help you understand your financial situation better and make plans for your money that will make your future financially secure.
Read my post for more information on the best finance books for beginners. Alternatively here are my top 4 for both beginners and more financially savvy folk.
The Best Personal Finance Books
These are best personal finance books I recommend to anyone who wants to grow their knowledge and take control of their money. Try and buy a used copy - it's good money sense!
Clever Girl Finance: Ditch debt, save money and build real wealth
The perfect book for beginners focused on women. Women tend to earn less and live longer. We need to know how to manage our own money.
The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness
The 7 baby steps to a total makeover of your money and your ability to manage it. Get out of debt and build your savings.
Broke Millennial: Stop Scraping By and Get Your Financial Life Together (Broke Millennial Series)
Written by a millennial for the millennial. A beginners guide with a strong emphasis on the mental aspect of managing your finances.
Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence
This book changed my relationship with money forever. Focused on achieving financial independence (work becomes optional).
7. Create a budget and a spending plan
The word ‘budget’ is frequently used in the financial world. That is because it really is important. Budgeting is eseential for beginners and experts alike. I know what you’re thinking: How do you create a budget you can stick to?
Budgets are hard, they don’t work, you don’t like them, you don’t earn enough to warrant having one. Have I missed anything?
I know budgeting might seem hard. But it really is not. A budget, in it’s simplest version, is just your plan to spend your money. Nothing more, nothing less.
Create a budget plan for your money so that you have a better idea of where it is being spent every month. Here are a few tips for creating and following a budget:
Calculate your income and expenses
When it comes to having financial success, one of the most important things you can do is create a budget and stick to it. The first step is work out how much money you have coming in every month. This includes your wages, side hustle money and any benefits you might receive.
Secondly list out all your essential spending and how much each one is. Essential spending is items like your mortgage, life insurance payments and utility bills. You can find this through pulling out your bills and checking your bank and credit card statements.
Then you need to list out all other non-essential spending such as clothes, entertainment and eating out.
Your income is the total amount of money you can budget for so you need to make your essential bills and non-essential spending equal your income. And ideally it should be less than your income because you want wriggle room for savings, debt repayments and money goals.
Track your spending for at least a month
To be smart with your money, you need to track your spending for at least a month. By understanding where all of your money is going, you can start making changes and sticking to a budget. You may be surprised by how much money you are wasting on unnecessary expenses every month!
Set realistic goals and make sacrifices if needed
When it comes to financial success, it’s important to set realistic goals and be willing to make the necessary changes. This may include creating a budget and sticking to it, even if that means making some tough choices.
Your income is finite, you should not spend money you don’t have as that equals increasing debt. Hard to do when you are either on a low income or used to overspending every month.
It’s also important to remember that financial success takes time and patience, so be prepared to work hard for what you want.
Find an accountability partner
One way to make it easier to stick to your new budget is to find an accountability partner. This is someone who will help keep you on track and motivated, and who will also be there to offer support when times get tough. Partners, husbands or best friends are often great accountability partners.
Automate your finances
Another way to be smart with your money is to automate your finances. Automating your finances means that you will have less opportunity to spend impulsively and more opportunity to save money.
You can automate much of your monthly expenses using online banking tools. For instance you can automate your utility bills, investments, cash savings and paying off your credit card in full. Set them up then they work motnh after month without any further action by you.
8. Pay off debt
Debt not only costs you money in interest, but it can also keep you from reaching your financial goals.
Paying off your debt is not only the responsible thing to do, it’s also the smart thing to do. Not only does it cost you money in interest, but it can also keep you from reaching your financial goals. Start by creating a budget that frees up some money to put towards your debts.
Then you should look to create a debt reduction plan. Most people use either the snowball or avalanche method to pay off their debts.
With the debt snowball method, you list your debts from the smallest to the largest outstanding balance, regardless of the interest rates. Make only the minimum payments on all your debts apart from the smallest one.
Put all your extra money each month towards the smallest debt. Once clear, do the same for the next small debt. You pay a little more interest this way than using the avalanche method but you are more likely to stick with snowballing your money because you’ll see the wins of complete debts paid off quickly.
The debt avalanche method is different as you repay your debts from the highest interest rate to the lowest one, regardless of balance. So you pay just the minimum repayment on all debts except the one with the highest interest rate.
Once that is paid off you put all your extra money towards the debt with the next highest interest rate. By using this method you will pay less overall interest than if you used the snowball method.
The downside to the avalanche method is your highest interest rate loan is often your biggest loan so it takes many months, if not a year or more to pay off your very first debt. No quick win.
For more information on paying off debt check out these posts:
Should I be paying off debt or save?
9. pay off credit cards
Only 44% of all credit card holders pay off their balance in full each month. This number represents an all-time high, due to lower spending during the COVID-19 pandemic and an abundance of government stimulus checks and furlough scheme help.
Get serious about paying off your balances for good by using the debt snowball technique described above. You can use strategies like locking your credit cards away in a drawer, or even cut up your credit cards and throw them away if you are worried about overspending. Use cash instead.
It’s important to remember that credit cards are not an infinite source of cash. They are DEBT cards unless you pay off the balance in full every month.
If you want to improve your credit score, one of the best things you can do is pay your card off in full and on time. This will show that you’re responsible with your money and can be trusted to repay what you owe.
If you’re looking to pay off your credit card debt and have a reasonable credit score, one of the best things you can do is consolidate it onto one low-interest card.
This will help reduce the amount of interest you’re paying each month and will make it easier to pay off your debt in a shorter period of time.
10. earn more money
You could get a better job, start a side hustle, or invest your money wisely. Here are some tips for earning more money:
If you want to make more money, the easiest way is to find a job that pays more than your current one. Check out job postings online or in newspapers and magazines, or ask friends and family for recommendations.
Start a side hustle. If you like your current job but want to earn more then consider starting your own business on the side. There are lots of businesses you can start for relatively little money, and many of them can be run from home.
Related posts:
How to Live Without a Job: 9 Life-Hacking Tips
How To Make 300 Dollars Fast: 30 Proven Ways To Make Money
What is the smartest thing to do with your money?
The smart thing to do with your money is to invest it. Investing in your future gives you the best return on investment. For example, if you put $100 in the stock market today and it returns $110 in a year, you’ve earned a 10% return on your money.
With the benefit of compounding, money you invest now can grow and multiple over time.
You should also check your credit report for errors. One of the smartest things to do with your money is to be vigilant about your credit report. Checking for errors on a regular basis can help you maintain a good credit score and protect yourself from identity theft.
How can I be better with money?
The first step to being better with money is to understand how money works. You can do this by reading books, blogs or other online forums like reddit. Once you understand how money works, you can start making better financial decisions.
Why is financial knowledge important?
Financial knowledge is important because it can help you make better decisions about your money, prepare for the future and avoid unnecessary risks. It empowers people like you and I to make good financial decisions.
By understanding concepts such as budgeting, saving, and investing, you can set yourself up for success and achieve your financial goals.
Financial knowledge empowers you to manage your finances in a way that works for you. This knowledge empowers you with the ability to understand complex financial concepts, make informed choices about your finances, and plan for your future.
It allows you to make informed decisions about your money and achieve your financial goals. With the right financial education, you can learn how to save money, invest for the future, and protect yourself from financial scams.
how to be smart with money in your 20s
The key to being smart with your money in the 20s is not to spend all the money you earn. Keep your lifestyle needs simple, don’t go into debt, save your money and invest it.
Enrol in your employers pension account and ensure you take advantage of any pension matching payments. Live below your means, always.
What are smart money habits?
Smart money habits are habits that will help you save money, make more money, and keep more money. First and foremost, it is important to understand your relationship with money.
What are your thoughts and feelings about money? Once you have a clear understanding of this, you can start making more informed decisions about how to handle your finances.
Reflect on your money habits, including the bad ones
To start, you need to be honest with yourself and reflect on your money habits, both the good and bad ones. This will help you develop a plan to break the bad money habits and cultivate better ones.
Some bad habits that can sabotage your financial success include overspending, not saving enough, borrowing money recklessly, and being undisciplined about tracking expenses.
But there are also some good habits that can help you achieve financial success, such as budgeting, saving regularly, investing for the future, and being mindful of your spending.
Normalize talking and learning about finance
It is important to develop smart money habits and talk about finance more openly. This can be done by normalizing the conversation around money and making financial education something that is discussed at home.
Learning about finances doesn’t have to be scary or difficult; it can be a fun and informative experience for everyone involved.
If you can learn how to be smart with money as a teenager then you will learn not to make many of the mistakes others make. Leaving you in a great position to maximize the money you have right from the start.
Don’t care what others think about you when it comes to finance
When it comes to your personal finance, don’t care what other people think about you. Don’t feel like you have to keep up with the Joneses.
If you can live a comfortable and happy life within your means, then that is what matters. And remember, it’s never too late to start saving for your future!
Get a little extra help
Benug smart with money is not just about balancing your budget, or being a numbers geek, although these do help! Sometimes thinking outside the box helps too.
Ever heard of money affirmations? Money affirmations are positive statements you repeat daily and can be used to help manifest wealth, financial abundance, and other related goals.
You can get vgery specific with your affirmations. So if your aim is to be a millionaire then focus on millionaire affirmations. Likewise, if your main goal is about ensuring you feel you have abundance in your life then abundance affirmations will be your jam.
Why is it important to save money for the future?
It is important to save money for the future because you never know when your life will change unexpectedly. You may need to pay for an unexpected medical bill, or have to change jobs to a much lower paying one. Or perhaps want to become a stay at home parent when you previously planned never to have children.
Saving money for the future allows you to reach your financial goals. Reaching your financial goals is not always easy, but it is definitely worth the effort. One of the most important things you can do to achieve success is to start saving money for the future.
This will give you a cushion that can help you cover unexpected expenses and maintain your standard of living during tough times.
Saving money for the future gives you:
- peace of mind in knowing that you are prepared for life’s unexpected events.
- allows you to live a comfortable lifestyle in retirement.
- financial stability
- can help you pay for your children’s college education
- help you achieve financial freedom
Saving money for the future is one of the smartest things you can do for yourself. When you have money saved up, you’re able to handle financial emergencies and have more flexibility in your life. Additionally, if you save regularly and invest your money wisely, you can achieve financial success.
Why is being smart with money important?
When it comes to being smart with money, figuring out your “financial why” is the most important step. Why do you want to be financially successful? What are your goals and dreams?
Once you know your why, everything else becomes easier because you have a motivating force behind you. Using money smartly is important because without money life is that much more difficult.
Having no money restricts your choices of what job to get, where to live, whether you can afford a vacation or even afford to have children. Though money doesn’t buy happiness, it can buy peace of mind.
With financial stability, you don’t have to worry about your next paycheck or how you’re going to make the rent payments. Financial success can provide a sense of security and freedom that allows you to focus on other things in life that make you happy.
Money is one of the most powerful tools that people have. With money, people can achieve anything they want in life. In order to be smart with money and achieve financial success, people need to learn how to use their money wisely. To make their money work for them.
You can accomplish incredible things by setting and steadily working toward simple but incredible financial goals:
- Building up savings for emergencies and large expenses
- Getting out of debt (including paying off that mortgage!)
- Investing for retirement
- Helping to pay for your children’s college educations so that they won’t be saddled with debt
- Building wealth so that you can achieve financial freedom
tips on how to be smarter with your money
The key to being smarter with your money is learning to understand it and the power it can have in your life. Once you understand that then the rest falls into place
Make a budget. Don’t overspend on unnecessary things. Live below your means. Invest money wisely. Have an emergency fund to cover unexpected expenses. Make a plan for your money. Educate yourself about personal finance matters. Use financial tools and resources to help you control your finances.
Being financially smart is something that builds over time. Some people are naturally great at being clever with money. most of us though take time to become financially smart.
Our money decision making is poor initially but we get better as we learn thourhg mistakes and educate ourselves. The key is to learn and to keep learning. It’s your money, make sure you make the best of it.
Start taking back control of your money by grabbing your copy of the Money Saving Starter Guide today.
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Last Updated on 13th April 2023 by Emma
