New money habits for 2016
FOR many people, the beginning of the New Year means a financial hangover, where they try to recover from all the splurging they’ve done during Christmas. And after the hangover will come reality – the reality of the need to be more prudent for the rest of 2016.
Below, Alanah Jones, brand supervisor at Stocks and Securities Limited, shares some tips to develop new money habits for 2016.
1. Identify income and expenses
Jones said it is important to know how much is coming in versus going out. “Track this in January so that you can gauge the rest of the year,” she said.
2. Categorise spending
Jones advised people to separate their expenses into smaller groups like food, education, personal care, entertainment, shopping, bills and travel. “You may already have an idea of what you spend the most on each month, but could also be surprised by what items have been adding up,” she explained.
3. Create realistic financial goals
“If you want to pay off a loan, how are you going to achieve that? What is the plan of action? A dream without a plan is just a wish,” Jones said.
4. Separate wants from needs
The brand supervisor said this is one of the first concepts we learn in school; however, many of us still struggle with the distinction between the two. “See tip five,” she said.
5. Cut back on wants
“Is it that the box lunch every day smells so good when you are hungry, therefore it means that you need it?” Jones asked. “Not all the time!” She explained that you may not want the leftovers from last night’s dinner, but you certainly need to save more to achieve the goals you set in tip three.
6. Design a budget
She said setting boundaries is a proactive way to avoid making the same mistakes. “Identify a weekly or monthly amount that you are allowed to spend. Give yourself repercussions if you spend more than that amount. Budgeting is discipline,” she said.
7. Invest a portion of savings
Jones said saving is a good start, but your money will not grow in a savings account. “There are investment options designed with lower risk but which give you higher returns than a savings account. Investing is one of the wisest things you can do with the money that you work so hard for.”
