Photograph Courtesy Of The United States Government
One of the biggest barriers to improving our finances is our mindset about money and how to spend it. If you grew up in a household where money and finances were not regularly discussed amongst the entire family, your mindset about money may not be the same as someone that has had some type of financial education throughout their life. Do not despair, as it can be easy to change your mindset about money and become more financially savvy. It is simply a matter of changing the way that you think about money. Here are some tips that can help you on your journey to a better financial future.
Keep Your Spending In Perspective
A good way to change your mindset about your spending is to keep what you are spending in perspective relative to your income. Many people that regularly overspend do not take the time to think about how much of their income that purchase is actually taking up. Before making a purchase, think about how much of your time you are actually sacrificing for that item instead of how the purchase will affect your bank account. If you make $15 per hour at your job, 6 hours of your time goes towards buying a $90 pair of shoes and 8 hours of your time goes towards purchasing a $120 coat. Think about whether the purchase is actually worth the time you have invested to make enough money to pay for it.
Avoid Paying Interest For Your Purchases
Paying interest means that you are paying extra to borrow money that you do not have. Credit cards and small short-term loans have the highest interest rates of all of the financial products, earning the companies issuing them billions of dollars per year. Those billions of dollars would be better used improving the lives of the people that are paying them. If you know that you will be making a big purchase in the future, start saving up for it so you can pay cash instead of using a credit card. Establish an emergency fund for unexpected expenses and resist putting vacations and other leisure activities on a credit card unless you can pay off the entire amount at the end of the month. Over the course of a year, you can reduce the amount of interest you are paying from hundreds of dollars to barely anything at all.