Being smart with your money can mean something other than becoming wealthy or investing in some elaborate schemes, or owning a large successful business.
It does not mean you must work and follow the plans of other successful people to be like them.
To be SMART means setting up Specific, Measurable, Attainable, Realistic and Timely (SMART) financial goals and objectives because what works for another person might not work for you.
You don’t need to figure it out, but you must be smart about your little money decisions.
This will enable you to know what, how, and when to accomplish whatever you want. For example, if you want to buy a house and have $10,000 in credit card debt, you can set a goal to pay off the debt, free up money for the down payment, and improve your credit score to increase your chances of getting a bank mortgage.
Here is how to be smart with your money this year.
Commit to learning about money
You can learn about money from various materials, such as the internet, financial books, and magazines, as well as from people who understand finances, such as financial advisors.
Commit to one to two hours daily to understand how the money can work for you, no matter how little it may be.
Spend less than you earn
This is the key to ensuring that you only spend a portion of your money as it comes in. It is a habit that allows you to have extra cash for other purposes, such as saving and investing.
Moreover, spending less cash is an excellent way to avoid unnecessary debt.
Save for emergencies
By nature, they are unpredictable, so whether you like t or not, they will come. And when they do, they will derail your financial stability if you had not prepared in advance.
Since they cannot be foreseen or avoided, it’s crucial to have a stable fund that can help sort out unexpected financial stings such as the loss of your job, sudden illnesses and accidents, or even repairs.
Don’t waste your money trying to look cool
Many people spend their money on unnecessary things such as ‘vanity maintenance’ without realizing the danger it poses to their financial well-being.
Imagine spending fifty thousand a month on your hair, pedicure, manicure and teeth whitening, or getting into debt for trendy outfits and shoes to look like your favourite celebrity.
It may be essential to feel and look good. But you don’t have to spend that much if you’re willing to limit your budget.
Pay yourself first
It might sound strange and selfish, but it is an essential financial rule that everyone needs to apply as far as personal finance is concerned.
Paying yourself first means prioritizing your long-term needs and well-being before any other expense.
You can do this by depositing towards health insurance, emergency fund, social and security funds or buying insurance covers.
Have a simple investing strategy that you can live with in the long run
You must have noticed that needs change over time, and techniques used this year may not work in the next.
A simple investment strategy means sound planning that helps you identify your risk tolerance at different points in your life.
A financial plan will help you to stay disciplined, a critical factor in long-term investing, and enable you to make solid financial decisions that are not based on emotions.
Know your enemies (fear, greed and impatience)
Many people want to get rich as quickly as possible, so they adopt the get-wealthy-quick mindset, making it challenging to be disciplined and maintain a long-term investment plan.
Some people, however, are easily swept by the prevailing market sentiments. Due to fear of the unknown, they do things because others are doing it, not because it is fundamental to their financial plan.
Yet still, others also feel like the plan is taking forever to work, so they make hasty and unhealthy financial decisions that might harm their finances in the long run.
Remember that you are the final decision-maker when it comes to your finances. That means you’re responsible for any gains or losses in your plan. Make it a habit to stick to your sound financial decisions while controlling your emotions.
