People buy takeout more often than they make food, they constantly replace things that aren’t broken – they just want something new – and they forget that they’re playing a long-term money game.
But why should you care about this?
Understanding that you’re playing a long-term game is critical to your financial success. Of course you want to serve the wants and needs of the NOW you, but what about the FUTURE you? A lot of what goes into getting better with money is simply changing your overall habits.
Much like how you can train yourself to stop biting your nails, you can train yourself to make better financial decisions. This is why we’ve put together a list of five financial habits you need to master before you’re 30 in order to better your future self.
1. Build your much needed financial buffer
This can mean two things. One being that you keep money in a savings account for emergency purposes, such as needing to replace an appliance or an unforeseen car maintenance expense.
The second thing being that you regularly put money away into a savings account in the case of job loss. With an emergency fund, the general rule is you keep approximately $1000 in a savings account for those unexpected occurrences. What this does is prevent you from having to result to using a credit card – which typically has a high interest rate – or having to go take out a loan you will then have to pay off long-term.
In the case of losing your job, it’s standard practice to keep anywhere from $4,500 to $10,000 in a savings account so you’re not left in a tight spot if job loss does happen.
2. Only buy things you REALLY need
This is a difficult task, but definitely a financial habit everyone should master. There is a fine line between what you want and what you need. This concept often gets lost in the parades of social media ads and other people you see shopping regularly.
One recommendation is, if you see something you like, take 24 hours to think about what that item would do for you. If it’s a new pair of jeans, then ask yourself how many pairs of jeans you have and if you need to add another pair to your wardrobe. If after 24 hours you still want to purchase the item, then perhaps it’s something you truly need.
Stay tuned for Part 2!
- Thomas Nelson
- Dave Ramsey
- Publisher: Thomas Nelson
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Last update on 2020-03-20 / Affiliate links / Images from Amazon Product Advertising API
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