Adopting better money habits may initially seem overwhelming, but the journey to financial wellness starts with small, consistent steps.

Habits are products of consistent practices. Learning better money habits could feel daunting, especially when you have to unlearn some things that seems right. 

Of a truth, money could seem so magical sometimes, how it disappears faster than you can earn it, leaving you scratching your head and wondering where it all went. 

You're not alone! Most people out there haven’t gotten a hold of proper money management. The good news is you don't need a degree in economics to take control. You can change the narrative by simply sticking to a few daily habits. 

In this blog post, I have carefully put together some practical and better money habits that anyone can use to take charge of their financial future.

The 50/30/20 Rule

Building better money habits starts with a solid foundation for saving. The 50/30/20 rule is a simple and effective method for allocating income and prioritizing savings. Here's how it works:

• 50% Needs: This covers essential expenses you can't live without, like rent, utilities, groceries, transportation, and minimum debt payments.
• 30% Wants: This is your fun money for entertainment, dining out, hobbies, and subscriptions.
• 20% Savings: Allocate this towards your emergency fund, retirement savings, or a specific savings goal.

Why it works:

• Prioritizes Needs: It ensures your essential expenses are covered first.
• Balances Saving & Spending: You allocate a designated amount for both saving and enjoying your money.
• Flexibility: The percentages are adjustable based on your income and financial goals. Someone with high student loans might allocate more towards debt repayment in the "needs" category, while someone saving for a house might put more towards savings.

Budgeting Your Income

Building a budget might sound scary, but it's really just a roadmap for your money. It helps you see where your income goes each month and ensures you don't spend more than you earn. Here's a simple guide to get you started:

Step-by-Step Guide to Budgeting Your Income

• Collect your bills (rent, utilities, phone), bank statements (subscriptions, recurring fees), and receipts for a month.
• Categorize your expenses: Differentiate the essentials(Housing, food, transportation, minimum debt payments, healthcare) from the discretionary (Entertainment, dining out, clothes, hobbies.)
• Choose your budgeting tool
• Track your income and expenses
• Regularly check your budget to see if spending aligns with your plan.Ideally, your income should be higher than your total expenses. However, If expenses are higher, look for areas to cut back on discretionary spending.

Make Your Money Work for You

So, you've got your budget under control, and you're saving some cash. That's fantastic! But what if you could make that money work even harder for you? 

That's where investing comes in. Investing can be a great way to grow your wealth over time, even for everyday people.

Here are a few things to consider before investing your money:

Know Your Goals: Knowing your goals will help you figure out how much risk you're comfortable with and how long you can leave your money invested.

Risk and Reward: Generally, the higher the potential return on an investment, the higher the risk. That means there's a bigger chance you could lose some money. 

Stocks, for example, can swing wildly in price, but they also have the chance of growing your money significantly over time. On the other hand, bonds are typically less volatile but offer lower returns.

Don't put all your eggs in one basket: Spreading your money across different investments like stocks, bonds, and maybe even real estate helps you avoid putting all your hopes on one thing that might go bust.

Be Patient: The key is to start early and be consistent with your contributions. Even small amounts invested regularly can grow substantially over time.

Conclusion 

Adopting better money habits may initially seem overwhelming, but the journey to financial wellness starts with small, consistent steps. Applying the highlighted tips on the 50/30/20 rule, budgeting, and investment will definitely change your financial future. 

The key is to start now, stay committed, and be patient. With these practical habits, you can transform your financial situation and pave the way for a more secure and prosperous future. Start today and watch as your financial confidence grows, and your goals come within reach.