💸Master these 5 Simple Habits to Upgrade Your Finances in less than 1 Year

We get paid, spend first, pay the bills second and invest third. That’s if there’s anything left! This means we’re always a month behind. We’re paying off last month’s fun with our funds today. And since we too often spend more than we can actually afford and is in our bank account we’re forever chasing our tail. 

And since we aren’t taught anything relating to money and personal finance at school, we rely on our parents to be our money mentors. But sadly, our folks  weren’t taught either. And unless our parents had parents who took the time to teach them or were able to observe their parents financial savviness and implement in into their own lives, we’re relying on them to do something they can’t. 

My parents gave me the most important thing ever: knowledge. And that is priceless. The things I know will mean I won’t fall into the trap that many fall into and I’ll be able to start planning for things like buying a house and retirement early on and with enough confidence. It’s usually confidence that holds us back from investing. Building your confidence starts with building your knowledge. 

Here are 5 simple habits that you can start implementing in your lives today to give your finances that Jan-boost they’re so desperately after. With some of these, you might not see results straight away but within 1 year you and your finances will be in a totally different spot. A much better one, I hope! 

master these 5 simple steps to upgrade your finances in less than 1 year
Photo by Elif Kaya on Pexels.com

#1 Invest, automate, forget! 

Investing is one of those things we wish we started sooner. Well luckily for you if you start investing today, imagine what your investment account would look like in 1 year’s time! We underestimate how much our money can grow over several decades. But this holds us back. 

If you’re unsure how much to invest, you should aim for at least 20% of your salary. As soon as you get paid, your funds should go straight to your investment account. This should all be automated (set up a direct debit) so that you don’t need to even think about it! And the best part? Your future self gets paid first! Speaking of which, read here the first thing you should do with your paycheck! Hint: it’s not hitting the shops.

So many people I speak to think that investing small amounts each month won’t make a dent. They’re wrong! No matter how small, it’s better than nothing. 

#2 Deal with your debt! 

The first place to start is with your Debbie Downer. Sorry fellas. You’ve gotta sort out your debt pile (if you have one). Debt is like a tax on your finances not to mention your wellbeing. It’s just not worth it. I’m not talking about debt like a mortgage or student loans (those are different) what I’m talking about is consumer debt. Credit debt. Ring a bell? 

master these 5 simple habits to boost your finances in less than 1 year
Photo by Monstera on Pexels.com

No matter how stuck you feel, a lot can change in 12 months. There are many ways of dealing with debt but the first thing to do is to simply stop spending. Get out of that rabbit hole. Credit cards are cool but they’re also dangerous if not used properly; read here how to use them the right way.

Stop living above your means and buying stuff you literally can’t afford and shouldn’t be buying. Credit cards are meant to be tools. They ain’t free-no-strings-attached money. Infact, they’ve got expensive strings attached to them. So much so that if you miss a payment you’d need to pay 20% in interest. That’s an extra 20% added to your monthly bill. Yikes. Read here how to boost your credit score in 6 easy steps!

A good idea would be to consolidate your debt into one pile and start biting away at it and arrange a payment plan with your credit card provider. They will usually work with you to come up with an appropriate payment plan.

A friend of mine found himself in £20k of debt. He rang up American Express (his provider) who helped him with a tailored payment plan. So many people don’t think of doing this. So give them a call and you’ll be surprised. 

#3 Pay into your pension

Your pension is something you think is the worry of another decade. Or a bunch! But it isn’t. Pension planning starts decades before. The earlier you start, the richer your future self will be. Investing £100 every month for 60 years will set you up for success. Do the calculations and you’ll be amazed! 

master your finances
Photo by Antoni Shkraba on Pexels.com

But we’re so short-sighted and we can’t fully comprehend how much our money can actually grow to over that time period that we prioritise our current needs over our future ones. The worst mistake people make is to ditch their workplace pension because they need the cash now.

You don’t even want to know how much this will cost you. Take advantage of your workplace pension. This is free money. Your employer will contribute to your pension – but only if you do. Otherwise, they’re not obliged.

In the UK there’s a min level at 8% but if you can invest more in your pension, I would definitely do that. You wanna start as young as you can to give your money the most amount of time to grow! 

So invest in your workplace pension – your future (oldie) self will be super grateful that they get to have a cool and comfy retirement. 

#4 Pause before purchases 

This one’s huge and can save you a fortune. 

When I impulse-buy, I end up buying things that are a) too expensive for me and b) totally unnecessary. Though usually it’s a combo of both! 

Photo by Andrea Piacquadio on Pexels.com

Before you buy, wait 24 hours. At least!

I’m working on this. The other day I spent £40 on a house plant. Yup, I’ve totally lost it. I also spent £90 on another pair of trainers, convincing myself I ‘needed’ them for work. That’s £130 gone on 2 items I bought on a whim. 

Wait, wait, wait. 

Give your impulses time to go away. 

Sometimes they won’t in which case it’s no longer an impulse. Ask yourself if you really, really need this (and yes, I know – a house plant is definitely not a need!) and if you can afford it! 

If any of those answer’s is no, move away. But do treat yourself here and there just don’t go bonkers about it. 

#5 Build your emergency fund 

You don’t need me to tell you the labour market has taken a U-turn. Layoffs are happening left right and centre. The 2 sectors most affected by these layoffs are tech and banking. I’m in the latter camp. Yikes. And as I’m writing this, both Spotify and Google said goodbye to 6% of their workforce. No one’s job is ever secure, as we’re finding out more and more as the days go by. Though, I read a comforting stat that ~60% of laid-off tech workers find jobs in less than 3 months.

Nothing is certain nor 100% guaranteed other than uncertainty itself! Having an emergency fund will give you peace of mind as we enter this strange recession and give you the resilience to handle anything that comes your way whether it’s a layoff or something else. 

Living without an emergency fund is like running across the road without looking both ways hoping you’ll miraculously make it out the other end. 99.9999% unlikely. Unless you’ve got superpowers, obvs. 

This time next year, your finances will be unrecognisable. Like they’ve been given the best makeover ever. 

What are you waiting for?? 

Go and make your 2024-self proud.

Disclaimer: This blog is not investment or financial advice. It is my opinion only. This blog is not a personal recommendation to buy/sell any security, or to adopt any such investment strategy. Always do your own research before you commit to any investment