Change your money mindset and take control of your financial life with these tips. This can change the way you’ve always handled your money and the way you’ve always thought about money.
Saving money becomes easy when you change your money mindset.
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#1 Have an emergency fund
An emergency fund is money you have on a savings account or somewhere where you can access it if you need to. A basic fund to keep you out of debt is about $ 1000.
If unexpected things happen and you don’t have any money, you probably end up with a debt. If you always make sure to have at least $ 1000 on your savings account, you can deal with unexpected stuff and stay out of problems.
Make sure to always fill your account again after you used some of it.
If you really want to be save, you can extend your fund to 3-6 months worth of expenses. In the case you lose your job, you have time to find another job or solution to fix the problem before you end up in debt.
#2 Needs & Wants
With everything that you buy, ask yourself these questions:
- Do I really need this?
- What happens when I don’t buy this?
- Where am I going to use it for?
- Do I still need it in a month or a year?
- Are my emotions trying to manage my money?
- Can I lend it from a friend?
- Can I buy this secondhand?
- Where am I going to put it?
This will pretty much determine if you really need the item you’re thinking about.
There is nothing wrong with wants. Everyone wants something once in a while. You just have to understand that if you spend money on something you want, you can’t spend that money on the things you need or use it to pay off your debt.
Think about your financial position. Can you afford this or will it get you into trouble next week when the utility bill comes along?
#3 If you can’t afford it, don’t buy it
Only buy things you can actually buy, without taking out a loan. The only exception here is a mortgage.
If you never need a loan, you will not go into debt and have to pay lots of money on interest. That’s such a waste of money! If you always save first before you buy something big, like a car, you really deserved it and you will feel proud.
You actually own the things you buy from now! And you never have to stress about the monthly payments that would knock on your door all the time.
#4 Look for value for money
When you want to buy something, don’t just look at the price. Take for example travel backpacks. A really cheap backpack might break after a few months, where an expensive one can last for years.
While this isn’t always the case, it’s certainly smart to check the brand out before buying. Especially with items that you want to use for years.
You’re $25 backpack might survive 6 months and then you have to buy a new one. That’s $50 a year. If you look at a $100 backpack, it will probably last for at least 5-10 years. Convert that back to a year and it’s only $10-20 a year converted.
This applies to lots of stuff. Personally, I should probably do this more often with clothes and shoes. I tend to buy pretty cheap clothes, as I don’t like to spend a lot of money. But more expensive clothes can usually last a lot longer.
But don’t overdo it though. There are still lots of cheap things that can also last for many years. But if you’re aware of looking for value for money, it will already make you think more about a purchase, before making it.
In the end it all comes down to your personal choices. Think about how long you want to use something and then check out reviews to make up your mind.
#5 Do a no spend month
If one thing changed the way I think about money, it’s this. I’ve done several no spend months and already after a short while, I started to notice a shift in my mind.
I started to realize that I don’t need all this stuff. When I couldn’t buy anything because of my challenge, I started to think about the items.
Do I actually need this?
Does it make me happy?
Everyone should do a no spend month. Or, when that’s a bridge too far for you, a no spend week. You will learn a lot from it and your money mindset will definitely change, I guarantee you that!
#6 Read financial books
The book that changed my money mindset a lot is Rich Dad, Poor Dad by Robert Kiyosaki. It’s very easy to read and if you struggle with money, you definitely should read it.
A couple of other great finance books are:
- Your Money or Your Life by Vicki Robin & Joe Dominguez
- The Millionaire Next Door by Thomas Stanley & William Danko
- Think And Grow Rich by Napoleon Hill
- The Richest Man in Babylon by George Clason
#7 Pay off your credit card balance every month
If you pay off your balance every month, there will be no interest, no debt and no problems. It saves you tons of money as the interest rates on credit cards tend to be really high.
#8 Pay yourself first
You can save money if you pay yourself first. How does it work?
Most people get paid, pay their bills and spend what’s left. And then they realize that their money is gone at the end of the month (or even sooner!) When you pay yourself first, you will have less money to spend unconsciously.
The first thing you do after you get your paycheck is to pay your bills and set money aside for real needs like groceries. After that, you should put some money into your savings account.
That way, you have less money to spend on unnecessary stuff and you will save money every month.
#9 Look for free or secondhand stuff
If you spend a little time, you can easily get lot of stuff for free or cheap. Family or friends that declutter their house or restyle it, may have furniture or other items for free or for a low price.
Also on Facebook you can find groups for a certain region where people give stuff away for free.
#10 Avoid big brands
Do you really need your shampoo or food from that big brand? If you try small or unknown brands, you will find that lots of products are about the same quality. And lots of food from cheap brands tastes almost the same as the big brand, but is half the money!
Also: don’t forget to compare shops if you’re looking for something new, like clothes. A lesser known brand can be of great quality for a small price.
Especially for kids clothes, I always buy cheap brands. Kids grow so fast and their pants get holes in the knees anyway (also in expensive pants). So just buy cheap clothes for them and you don’t have to panic when they come home with another hole in their clothes.
Plus you don’t have to stop them from playing outside. Let them get dirty and explore the world!
#11 Stop buying new cars
Did you know that the average monthly payment for a new car is a whopping $530 (Q3, 2018)? That’s a lot! And a new car is such a bad investment, because the price drops enormously the moment you purchase it.
If you look for a used, reliable car, you don’t have to get into debt and won’t have to pay a huge amount every month to drive a car. There are lots of good, used cars available.
Personally, I drive a Toyota from 2005 for 2,5 years now and had the money to buy it, so there is no debt and no monthly payments. All the money I keep in my pocket because of that, can go to savings or perhaps an awesome family vacation.
Even if a used car needs some more repairs than a new one, it’s still a lot cheaper to drive a used car.
What do you rather do with your money? Give it to big car companies or spend it on things that actually matter, like your loved ones, or your goals and dreams?
#12 Plan your meals
If you shop only once a week, you will save money, because you won’t get tempted every day to buy things you don’t need. Or grab that Snickers at the cashier because you feel like eating one.
When you plan your meals every week and make list, stick to that list. And always take your pantry into account. What do you still have and how can you combine that to make a meal?
If you do that at least once a month, you don’t have to throw away food that is expired.
#13 Write down your goals
Everyone has goals or dreams they want to reach in their lives. If you start to calculate how much you need for your goals, you can start adding your goals to your budget. That way you will actually reach your goals and dreams instead of always having to keep dreaming.
For example: You want to go to Disneyland with your children. While you can make this as expensive as you want, you look into it and found out that you are able to go for $5000, including plane tickets, accommodation and food.
If you make this a 2-year-goal, you have to save less than $ 50 a week! When you know what you are saving for and you know how much you need to save to reach your goal, you can make plans to save the $ 50 every week.
#14 Free activities are awesome too
Activities don’t have to cost you tons of money. You don’t have to go to Disney world every year and your children will enjoy the playground just as much as an expensive amusement park.
#15 You don’t need a large house
An average family home in the US is 2687 square feet. That is really huge!
A big house:
- Is more expensive, thus costs more money every month
- Usually has a higher utility bill
- Needs more cleaning
- Tends to have more stuff in it because there is so much room to put everything
- Makes it easier to lose track of things
You can also go for a smaller home. Lots of people live in way smaller houses (me included). It can save you a lot of time and money!
If you don’t have 300 pencils laying around, you don’t have to buy boxes to put them in.
When you have less stuff in your house, you can find the things you need way faster. This also prevents you from buying something you already have in your home, but can’t find.
It also saves you time to tidy up and clean your house. Time you can spend on your loved ones or on a side hustle to earn some extra money.
You can also make money by selling the stuff you don’t need anymore.
How is your money mindset?
Do you have tips to change your mindset?
Let me know in the comments!