For most of us, having excess money to invest and save at the end of the month seems nearly impossible. Being told to be frugal and trying to not spend money on things we want is easier said than done. With money being perceived as limiting and associated with what we “CAN’T” do rather than what we “CAN” do, it’s difficult to form positive money habits.
“The chains of habit are too light to be felt until they are too heavy to be broken” – Warren Buffett.
It may seem difficult to get rid of those bad money habits as they’re often difficult to identity and we often find ourselves turning a blind eye to them. However, with planning and some automation, you’ll soon be on your way to breaking those chains of bad money habits.
Your spending roadmap
Creating a budget is the first step to starting your positive money habits. You want to setup a budget to ensure you earn more than you spend (i.e. you make ‘a profit’) so that you avoid expensive debt. Regardless, a budget is a plan to spend rather than a plan not to spend.
Think of a budget as Google Maps for your money, showing your Rands exactly where they need to go. A budget should make sure that you spend more on the things that matter most to you and spend little or nothing on the things that don’t.
Automation is your friend
Creating a budget isn’t difficult but sticking to it is. Set up automated payments or debit orders for your debt repayments, emergency savings and investments as soon as your salary arrives in your accounts. This way you can spend guilt-free, knowing that your wealth-growing actions are complete.
Once you have a budget, tracking your actual spend against your plan will help you identify areas to improve. Some of us have grand dreams to comb through bank statements and spreadsheets at the start of the year. The reality is that tracking your spend is cumbersome unless you automate this using an app like 22seven.
Set up automatic account updates to make sure that your data is always fresh. Then review your budget regularly. In our research, we have found a statistically significant relationship between weekly active 22seven users and good financial outcomes like spending less than you earn and reducing credit card debt.
Nudging you in the right direction
Besides helping you to create and track your budget automatically, 22seven uses nudges – little insights – to suggest areas for improvement and motivate you to stay on course. Start the journey to improving your money habits by linking your first account and let us help you to set budgets, save for your goals and nudge you in the right direction!