Hey everyone! Today I have a great guest post for you from Mike at NinjaBudgeter.com (I love that site name BTW). This is right around the time that our 2017 $$$ resolutions will start to wear off. We’ll be making them again in 2018 before we know it! Enjoy ~M$M
It’s a troubling thought isn’t it?
One full year will pass. Good times, memories, and a lot of hard work, and after all of it, you could still be broke. A full year from now you may still worry about whether you’ve got enough in your bank account to fill up your fuel tank.
It’s still early in the year so if you’re like me, you’re probably still on track with your resolutions. Maybe you’ve been diligently pinching pennies or perhaps you’ve started a side hustle to get some extra cash flowing in.
Soon however, the excitement of new goals will wear off and you’re likely to find yourself reverting back to the same money habits you’ve had your whole life.
Here’s how you can stay broke next year…
I know how it feels to suck at managing money. I struggled to control my finances for the first decade of my adult life. My bad habits always sucked me back in, no matter how hard I tried to spend less and save my hard-earned money..
Changing your money habits as an adult can be incredibly difficult. Sometimes, to understand what we need to do, we first need to get a clear idea of what NOT to do.
So here we are, I’m going to show you exactly what you need to do to ensure sure that you’ll still be broke in 2018.
1. Ignore Your Spending Habits
It’s tough to sit down and do an honest assessment of where you’re at financially. Do you know how much money you actually earn? Do you know how much money you’re spending on eating out every month? What about your cell phone, groceries and heating?
The key to remaining broke is not tracking how much money you’re taking in and how much you’re spending. Ignorance is bliss right?
A better idea: figure out how much you’re actually spending each month on living, transportation, bills and leisure. You can’t get control of your money if you don’t know how much you’re spending.
2. Don’t Keep A Budget
Not keeping a budget is one of the best ways to make sure that you’ll be broke in a year’s time. A budget is the most powerful tool that you have to take control of your money .
You can’t control your money if you don’t know how much of it is coming in, and how much of it is going out.
A better idea: create a budget today. Don’t have the time? Google Sheets has a free budget template that you can start using right now. Just enter your income and expenses and the calculations are done for you automatically. It’s that simple.
Related: Personal Capital vs. Mint Review
3. Pay Everybody Else First
Few people that I know actually do this. Most of us pay everybody else first. The cable company, the car loan company, the grocery store and the gas station get the first cut of their cash. If there’s anything left over, that’s used to save and invest…maybe.
One habit that’s prevalent amongst the wealthy is that they pay themselves first. When the paycheck comes in, they save and invest before paying any bills. This is is a key habit to build if you want to be successful with money.
A better idea: Start a savings or investment account. When you get paid, put 10% in there before you do anything else.
4. Keep Making A Car Payment
If you’re making car payments and would like to remain broke, you’re on the right path. In my opinion, there’s no quicker way to relieve yourself of your hard-earned cash than to pay interest in a rapidly depreciating vehicle.
Having financed three brand new vehicles in my 20s, I’ve learned this lesson the hard way. A car payment will suck up a huge portion of your paycheck and leaves you with less to save and invest.
A better idea: Get out of your car loan asap. Buy a car that you can afford with cash and keep making the car payment to yourself. You can put the money into a short-term investment and within a couple short years, you’ll have enough money to buy the same car and own it outright.
Related: How to De$troy Your Car Payment
5. Don’t Bother Cutting Your Bills Back
Most people could save an easy $100 per month at least just by:
- Eliminating services that they don’t use
- Negotiating with cable, cell phone and internet providers or
- Moving to discount service suppliers
I have personally offloaded over $150 per month by eliminating an unused home phone, moving to a discount internet provider and negotiating a better rate on my cell phone.
The solution: cut bills that you can do without. Make it your mission to lower any that are left. Most of these companies have better plans that you can get access to through their customer retention department.
6. Fail To Plan For The Unexpected
An emergency fund is the difference between a blown transmission or broken refrigerator being a minor nuisance, and a catastrophic event. An emergency fund should be one of the first things you put into place when you want to get your finances in order.
A better idea: save up an emergency fund that is appropriate amount for your lifestyle. $1000 is probably plenty to begin with if you rent or don’t own a car. If you own real-estate and have vehicles you’ll want to have 3-4x that much.
Ideally, you should consider having 3-12 months of savings in an emergency fund. That way you’re protected against broken appliances as well as injuries or job loss for a few months..
7. Buy Groceries At Full Price
Groceries are an easy way to overspend, especially if you’re buying for a family. Hands up if you’ve ever been caught off guard by a $500 trip to Costco!
Finding ways to reduce the amount of money you spend on groceries is not that difficult. Meal-planning, buying in bulk, buying sales, switching to generic brands, couponing, cheap freezer meals etc. There’s lots that you can do to spend less here. Take it from a guy with with 16 one-dollar loaves of bread in his freezer.
A better idea: how you address reducing your grocery budget is going to depend on your situation and how many people you’re buying for. I’m not going into detail here but do some google searching on the subject and you’ll find that there are lots of ways to save.
If you’re early on in your financial journey, some of these things are going to be difficult for you. Keep at it. Get some help from somebody who has been successful managing their money. Seek a financial mentor, do whatever it takes.
These 7 things have made a massive difference in my financial life and the lives of many others that I know. I’m confident that if you implement these habits, you will not be broke by 2018.