In real-life romantic relationships, it’s often the little things that matter, not the grand gestures worthy of a rom-com movie.
The same is true of personal finance. You may have a high-paying job or a huge inheritance, but if you’re bent on boosting personal wealth, know it’s your little money habits that will play a crucial role in making that a reality.
Here are five money habits that can help you in your quest to build wealth.
1. Save First, Pay Your Bills and Spend Money Later
Here’s what most people usually do every time they receive their paychecks: pay their bills, spend the money, then save whatever is left, that is, if there’s anything left in the first place.
How about reversing that mindset? Instead of treating savings as an afterthought, you should make it the first thing on your to-do list. After setting aside money for savings, that’s the time you pay your bills, then spend anything left over.
As for the amount to set aside for savings, you can start small, like 50 dollars a month or whatever you can afford. In a few years, you should be able to save enough to avoid debt, make large purchases, and have an improved sense of financial freedom, among other things.
2. Make Paying High-Interest Debt A Priority
Since it’s hard to build wealth when you’re not debt-free, you should work towards paying all your debt, starting with the high-interest ones, then work your way down.
By prioritizing high-interest debt and paying it off as quickly as possible, you should be able to save the most money. If you don’t do this, you’ll end up paying more since longer debt lifespans mean a longer time for interest to accrue on its balance.
3. Track Your Spending
It may seem like a tedious task, but tracking your expenses can help you take better control of your finances.
When tracking your expenses, you can pinpoint any wasteful spending habits and eliminate them. It’s also a great way of ensuring that you’re living within your means, that you’re not spending more than you’re earning.
There are plenty of apps and free spreadsheets online that make tracking your expenses easier, although recording your purchases on your phone or a notebook would be a good idea as well.
4. Refrain From Spending Extra Money
Most people splurge whenever extra money falls into their lap, like an unexpected inheritance from a long-lost aunt, a surprise bonus at work, or finding a $100 bill within the pages of an old book.
While it’s within your rights to do whatever you want with that money, you might want to put it to work instead of spending it all in one go.
Just pretend that your sudden windfall didn’t happen and use the money to pay off debt or add to your emergency fund. If the amount is sizable enough, you might want to contact a financial advisor and talk about investment management strategies.
5. Explore Side Hustles
A raise at your day job would be great, but you can earn more money without relying on your boss to pay you more.
We’re living in a gig economy, where you can earn extra money doing jobs that may not even require that much skill, like driving for a ride-sharing company on the weekends.
Then again, the more skills you have, the more potential for you to earn a bit more cash on the side. There’s plenty of freelance work online, including writing and graphic design gigs. You can design smartphone apps, which could help you earn passive income once people start downloading them.
If you’re feeling a bit more entrepreneurial, you can even launch a small business while you keep your full-time day job.
These are just some of the money habits you need to develop to build personal wealth, but they’re a good enough place to start.
Whatever your financial goals in life, your money habits will come into play and spell the difference between a life of constant financial stress and one of prosperity.
About the Author:
Rachael Harper is the Content Marketing Strategist of Bennett & Porter, a wealth management and insurance firm based in Scottsdale, Arizona. When not writing, she makes use of her time reading books and playing bowling with her family and friends.