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Five tips on becoming good with money
By Huwaida Ishaaq
Money may not be everything but having thoughts of spending money or the feeling of not having enough money can affect our lives, a study has shown.
At the Sun Yat-Sen University in China led by psychologists Kathleen D. Vohs, Xinyue Zhou and Roy F. Baumeister, 84 students were divided into two groups and were socially excluded to observe how money affects their condition when under distress.
In one experiment, one group had money to count while the other was given pieces or paper. Several tests concluded that the participants who had counted money reported greater feelings of inner strength, self-sufficiency and greater tolerance for physical pain.
In another test, one group had to write about their monthly expenditures while the other was asked to write about the weather. Money was also a clear factor in the experiment with the group who had been reminded of having spent money feeling greater social distress and physical pain.
Whatever your age and financial status, sooner is better than later if you want to start reinforcing good money habits. Begin with the following tips and the next time you feel overwhelmed by money, let it be because there are too many options on where to invest your cash and how to spend it.
Tip 1. Be accountable
Acknowledge that it is up to you to get on top of your finances. Being accountable also means accounting for your money. Keep records of everything from lunch or grocery receipts to rental cheques. In other words, set up a simple system that allows you to stay accountable.
Tip 2. Cut or lose the credit card
When you spend money you don’t have, it generates interest. You must realise that your credit card is not your lifeline. Always pay more than the minimum amount. After you're through with the credit card get a debit card so that you can still enjoy online shopping without the burden of debt.
Tip 3. Prepare a budget
Develop a spending plan based on what you need whether daily, weekly or monthly. Adopt some lifestyle changes such as setting a limit as to how many restaurant lunches you’re having
Tip 4. Assign your income into specific areas
The idea is to take a percentage of your income and divide it up into six different categories, each for a different purpose.
- Ten percent for Long Term Savings
- Ten percent for Education and Learning
- Ten percent for Play
- Five percent for Charity
- Ten percent for investments
- The rest is for necessities
Tip 5. Remember that 'ETC'
This stands for 'Every Thing Counts'. Teach yourself to become financially savvy with these tips and build upon them. When you’re ready, stretch a little further. Look to build an emergency fund with three months living expenses or talk to someone about preparing a will. You can take on a part time job or learn a skill that you can monetise. Before you commit to anything that involves numbers and rates, make sure to shop around to get the best deals.
