Having debt can make life difficult. It’s not easy living pay cheque to pay cheque, trying to keep up with your expenses and struggling to save. When you’re in a situation like this, it can be difficult to imagine ever living debt-free. However, that’s not true.
To become debt-free, you must develop easy yet effective habits that will enable you to keep more of your income. Fortunately, anyone who is prepared to make minor, gradual adjustments to their daily routines can live debt-free. Whether you have applied for a payday loan online or need a personal loan to meet expenses, there’s a way everyone can get through debt, no matter how much they owe.
The key is to build progressive money habits and make well-informed financial decisions. If you’re ready to embrace debt-free living this year, try to emulate these 6 habits in your life.
1. Pay Cash
Make it a practice to always have cash on you when you go shopping. Why? When paying with cash, you experience the tangible sensation of “losing real money,” which makes it more difficult to part with. When you run out of hard currency, it is gone forever.
The tendency to stay within your budget is higher when using cash for most in-person transactions. With cash in hand, you’re likely to spend less and be more mindful of your spending than when using a credit card.
2. Save for Emergencies First
Put away a decent amount of money for emergencies. By underestimating the financial impact of the emergency and believing they can cover the unforeseen expense out of their pay cheque or savings, people often put off emergency savings until later.
Having an emergency fund in place ensures you don’t go in debt when those unexpected and unavoidable expenses crop up. Incorporating this important financial exercise when creating your budget is a surefire way to ensure you don’t skip the step.
If you haven’t created a backup fund already, consider this your sign to set aside a fixed percentage of your pay cheque before you start buying groceries and paying bills. This way you treat this backup fund like another utility bill and make funding a priority.
Just imagine feeling the wave of relief when you know you have an emergency fund catering to emergency expenses. After all, emergencies don’t come with an advance notice.
3. Practice Deferred Happiness
The “BUY NOW!” ads on supermarkets and internet shopping sites encourage impulsive purchases, but it is okay to not buy anything right away. Every day you might see something that catches your eye or feel the need to go on a vacation or redecorate your house, but you do not have to in that moment.
Embrace deferred happiness as a way to prevent rash decisions and purchases. Give yourself a cooling-off period, such as 24 or 48 hours, to consider whether you truly need this product, service, or experience at this time and whether it is worth the investment. If you want the item even after the cooling-off period, then go ahead and purchase it.
4. Avoid Jumping On the Newest Trends
Trends come and go. The novelty of the latest trend wears off as quickly as the changing seasons in fashion. Whether it’s smartphones or TV sets, the latest and greatest electronic devices of today will become more affordable in a year or two.
Avoid buying into the hype, especially if it’s something you will only use once or twice in your lifetime. Be wary of anything that feels trendy. Instead, try to spend money on something valuable that matches your lifestyle and preferences.
5. Avoid Snowballing Your Money Mistakes
Everyone makes mistakes, even financial experts. However, the key is to avoid letting your mistakes go into a free-fall mode. If you make a mistake and overspend on your credit card, recover quickly rather than making another poor decision. Even though a new purchase on your credit card might seem harmless, it can quickly spiral out of control once the interest amount is added. Pause right there and rework your budget to pay off your credit card debt first.
6. Make Your Own Meals
This habit might seem simple, but it can be difficult to follow if you’re not in the habit of cooking your food. Quick trips to the coffee shop and fish and chips takeout eat up your budget faster than you would think. Cooking your food at home is certainly cheaper (and more nutritious) than going out or ordering food.
Save the restaurant meal indulgences for special occasions or emergencies, such as when you’re too sick to cook. Planning and cooking your meals not only saves a lot of your hard-earned money but also helps you make healthier choices.
Summing Up
Starting and sticking to these six habits may seem like a challenge, however this is always the case when starting something new.
Couple these habits with a meticulously chalked-up budget, a little nest egg for retirement, and investing for long-term returns, and you’ll be richer with a clear roadmap to a long-term debt-free life.
Get ready to embrace debt-free living by incorporating these small but life-changing habits into your everyday life.
