THE BROKEN WALLET

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How to be better with money (sometimes, you just need a new plan)

I can’t count the number of times I’ve heard people refer to themselves as being bad with money, and they often make statements like “I’ll always be broke” or “I’ll never get ahead.”

But here’s the thing…none of us are born knowing how to manage money. This is something we have to learn along the way. Some people learn earlier, others learn later. Either way, it’s a skill we acquire over time.

So if you feel that you’re bad with money, in most cases you just need a new plan. Here’s how to be better with money. 

1. Change your language

I do believe in the power of mindset. Now granted, mindset alone isn’t enough to get out of a financial hole. It takes action too.

But one thing I’ve learned from experience is that saying “you’ll always be bad at something” can become a self-fulfilling prophecy. If you don’t believe you can do better, you might not even try to change things.

Therefore, the first step to becoming better with money is changing your language and how you view your situation. Instead of saying “I’m bad with money,” say “I’ve yet to learn how to manage money.”

Now, this doesn’t suggest putting up blinders. Self-awareness can help us make better decisions. However, don’t let the past define who you are…or what you can become.

2. Make one good financial decision each day

Being better with money doesn’t happen overnight. It might take a period of weeks, months, and even years. And getting to this point often involves a series of mini steps. Each individual step might not seem like a lot. But as a whole, they set the stage for a better financial picture.

One mini step is to make at least one good financial decision each day. If you can do more – great, but commit to at least one.

Keep in mind that these decisions don’t have to be monumental. For example, instead of grabbing coffee on the way to work, you can brew your own at home. If you grab lunch with a coworker, instead of spending $15, you spend $10. Or you might transfer money into your savings account, even if it’s only $5.

The point of this exercise is to become more conscious of your daily decisions and develop good financial habits – which is how you become better with money. 

One healthy financial habit often leads to another…

3. Create a daily spending journal

I also encourage keeping a spending journal, where you’ll write down every miscellaneous dollar spent in a day.

When some people overspend, it’s not the big things that kill their budget – it’s often little purchases that add up over time.

It can be $2 spent at the gas station on a candy bar, a bag of chips they grab at lunch, or extra items added to their cart in the checkout line. It’s easy to forget about the small purchases, yet these amounts can also make it difficult to save, pay off debt, or even pay bills on time.

Part of being better with money is knowing where your money goes. Once you have a clear picture of how much you’re spending on extras, you can make adjustments and free up cash in your budget.

4. Forget what you’ve learned

Some people are “bad with money” because they weren’t taught how to manage it…and because they had a poor example growing up.

To be fair, parents can only teach what they know. And unfortunately, bad money habits can pass from generation to generation. So if you notice a pattern in your family, it’s a matter of (1) acknowledging this, and (2) forgetting what you’ve learned and starting fresh.

Some habits are ingrained in us, so this isn’t always easy. But again, it’s all about tiny steps. For example, you can teach yourself how to:

• budget
• live within your means
• manage credit and debt
• pay yourself first

5. Pay your bills on time

I understand this can be difficult for several reasons, so I’ll start with the oversimplified tip which assumes you earn enough to pay your bills. In which case, late payments are due to either poor organization, lack of a budget, or forgetfulness.

Not paying bills on time can result in late fees, debt collection calls, and bad credit. And if you experience any of these, I understand why you might believe that you’re bad with money. To be better with money, you must take steps to ensure timely payments.

The number one thing you can do is create a budget because lack of one causes a lot of overspending. 

However, if you pay bills late because your basic expenses are greater than your actual income, that’s a separate issue. And if so, I have a few videos that might help, which I’ll link to here.

6. Tackle impulse spending

A budget also helps control impulse spending, which is spending on unplanned purchases. Breaking this habit can be difficult, but you must fight the urge because being impulsive can hurt your finances – regardless of income. It only takes a few expensive impulse buys a month to throw you off. 

To help control spending, ask yourself: Why am I making this purchase? And be honest with the answer.

• Did you have a bad day and you’re trying to make yourself feel better?
• Is shopping a form of entertainment?
• Did you forget to write a shopping list?

Once you understand why you’re buying something, look for alternatives. So instead of shopping after a bad day, listen to music instead. Also, create a few spending obstacles. For example:

• Lock or freeze your credit card
• Commit to a 24 to 48 hour waiting period before buying an item
• Avoid temptations

Take these measures and you’ll get one step closer to being better with money.