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Updated on Wednesday, March 2, 2016
If the thought of getting your finances in order for financial security 10, 20, even 30 years down the road really scares you, then consider taking things just one day at a time, instead. While the big picture is always important, if you can make small changes to your finances each and every day, those changes will really make a difference over the years, and you’ll have barely even noticed that you’ve been putting in the effort.
But what changes can you make today that will influence your finances for the future? Nick Clements, a former banker and co-founder of MagnifyMoney, has some thoughts.
1. Know (and stick to) your budget for today
Having a budget is one thing, but realizing that budgets fluctuate with lifestyle factors (moving to a more expensive apartment, increases in cell or utility bills, a raise a work) and actually sticking to them every single day is another. For starters, take a little bit of time every month to take a look at how your budget is working for you, and to readjust if any of your monthly financial factors have changed. Perhaps you have visitors coming and you’ll need to budget a bit extra for entertainment when they’re in town, or maybe this is one of those months where you need to do a really thorough shop and stock up on all the pantry essentials you’ve used up over the last few months. Whatever the case, budgeting for any extra costs up ahead will help you avoid feeling blindsided by them. To help keep you on track, Clements suggests using a financial app like Level Money, which helps you understand how much you can afford to spend today, while also keeping you within your overall budget. After all, as Clements put it, “if you don’t know your limit, you will definitely go over it.”
2. Don’t make knee-jerk reactions
The name of the game when it comes to personal finance is to not panic, especially when it comes to investing. “Your stock investments should be long-term,” says Clements, “and selling in a panic only harms you over the long haul.” So instead of checking in on your portfolio every single day, try making it a point to only look at it every few months, or even every year. Doing so more frequently could cause you to make a costly mistake.
3. Avoid impulse purchases
One of a budgeter’s biggest dilemmas is making those impulse purchases. In fact, one survey found that a whopping 76 percent of the average shopper’s purchasing decisions were being made when they were actually in the store. Adding superfluous items to spending can really blow a person’s finances, and over time, all those little additional purchases will start to add up. Avoid shopping online (one study from research and consulting firm User Interface Engineering found that impulse purchases represent almost 40 percent of all the money spent on e-commerce sites), shop with buddy (as long as they’re financially responsible, too!), since they may be more likely to talk you out of making of-the-minute purchases, and try to avoid shopping during times of stress or when you’re upset (purchasing items to make us happy when we’re feeling low is a fairly common way to fall into the impulse shopping trap). When all else fails, and you just know you can’t help but impulse shop a little, add some wiggle room in your monthly budget for just that, this way you’ll be able to pick up something just have to have, but you won’t have to worry about the financial repercussions of your impulse shopping habit.