Our financial situation is a reflection of what we have done for years. For many of us, the motto is simply spend, spend and spend. Unfortunately, not many people realize quickly enough that this spending pattern can’t go on. Fortunately, there are ways we can do to quickly change our poor financial habits and become more responsible financially:
- Create a simple budget, now! : Many people avoid this task like the plague. However, it is truly empowering to have even only a quick glimpse of our actual situation. By creating a budget, it is easier to accept where we are financially. There are many budget worksheets available for free, however; if they seem to be too complicated, we can make it on our own with Microsoft Excel, with Microsoft Word or just with pen and paper.
- Set realistic goals: Many of us never set goals, because we think of them as unnecessary. We could break up our goals into long-term and short-term ones, so we are able to progress along the way. When set our goals, they must be realistic and we should be able to know what to do with them. By being realistic, our goals should be achievable in specific situation. If we are being unrealistic, it is easy to see that it is very difficult for us to achieve them and we will go back to our old ways. We should take baby steps and start small. Obviously, our goals shouldn’t be too trivial or too easy. There should be some amount of challenges in them and we should stay flexible. We shouldn’t let small hiccups get us down. There will be occasional obstacles come up, but we should get right back on track, move it through and remain flexible.
- Don’t compete: This step is really freeing, because many of us spend more and more, although we will never catch up with others. We want people to accept us and many people think that we can do that by being slightly better. This may create a huge problem, especially if we are encouraged to spend more than we can really afford. Deep down, we know that these financial habits are not sustainable and all that we have are just a facade. This is a vicious cycle that we should get involved with. In order to improve our financial condition, it is better to reduce contacts with people who compete with one another in terms of material ownership. Instead, we should be with friends who accept us as what we are. We should spend only on true essentials. We will feel free and in fact, others could do the same.
- We need to differentiate wants and needs: This can be a rather tough exercise, but it should well worth the effort. We need to do this, even if we do it only for short terms durations initially. As an example, before we do grocery shopping, we should make a list of things that we really need and that represent basic requirements. After we identify them, we should bring only specific amount of cash, no credit card or debit card.