Do you always think before you swipe your bank card? When last did you go through your bank statements or credit report? Reflecting on your habits can help you gain a better understanding of your financial status.
Financial reflection involves deep-diving into your finances to learn how you can manage your money more effectively. Here are three ways to get started.
1. Assess your financial behaviour
Look at your bank statements for the last three months to get a clearer understanding of your financial habits. For example, you’ll be able to identify late payments, bounced debit orders and overspending. They could also show positive patterns such as paying more than the minimum amount owed on a credit card or reducing your monthly entertainment expenses.
2. Identify your triggers
Your financial past impacts your financial decisions and understanding your ‘why’ makes it easier to make better choices. Perhaps you splurge when you’ve had a bad day, or you struggled financially before, so now you are hesitant to use credit when it would actually be helpful. Pay attention to your spending patterns so you can tackle the root cause of the issues.
3. Find better ways to manage your money
If you are unsure of where to start, go back to the basics. For example, draw up a budget, eliminate unnecessary expenses and reduce your debt. Your financial coach is available to guide you, from choosing better financial actions to cultivating better habits.
For more financial advice, read these helpful articles:
Money may not be able to buy you happiness, but it can help secure a comfortable future. Read our tips.
Financial stress negatively impacts nearly every facet of your life, affecting concentration and focus, your work performance and family responsibilities, which can lead to problems in relationships. Fortunately, if you make wise financial decisions, money can bring relief.
Here are 4 ways to put your money to good use:
1. Get value for your money
Work on significantly reducing your bills and getting more value for the money you have. For example, this could mean paying your debt and not taking on more credit. This is important as the less debt you have, the more you can save for emergencies and prevent the debt cycle.
2. Prioritise saving
Saving ensures you have an emergency fund or a safety net for unforeseen events. It also enables a better future, creating the possibility of enjoying financial security in your golden years. Ideally, 10% of your monthly earnings should go towards savings. If you can’t afford 10%, commit to an amount that is more realistic. In some cases, 10% can be achieved if you reassess your expenses.
3. Spend wisely
While splurging can give you temporary happiness, carefully planning your finances will ensure peace of mind. Set up a monthly or weekly budget and stick to it as far as possible. Include your expenses, debit orders, savings allocation and a portion for recreational spending and entertainment.
4. Pay it forward when you can
Helping others can make you happier. When you can afford to, donate a portion of your income to those in need. You can either give money or you can buy essential items, such as blankets, perishable foods, clothing and soap, and donate those instead.
Remember, your financial coach is ready to help with confidential and professional financial coaching and support, over the phone or electronically.
The information is shared on condition that readers will make their own determination, including seeking advice from a finance professional. E&OE.