You see a huge cache of financial articles centering around the importance of frugality and everyday saving habits.
The necessity of bridging the two? Now that’s another story.
Going from smart saver to financial guru doesn’t happen overnight. Overload of information can send people running for the hills rather than running towards their bank account with open arms and an open mind.
But understanding what happens with your money, and what actions you should take to begin or continue building on your financial stability are essential if you want to secure your present and future financial security.
This is true even if – no, especially if – you have debt, whether it be student loans, credit cards, or a mortgage.
Here are a few ways to put a little pep into your financial step, and inspire you to begin accelerating your finances:
Add momentum to advice
Cut costs, pinch pennies and establish responsible saving habits – tips that would make even the frugal-ist of friends proud.
But blanket advice alone isn’t the answer to financial stability. As you continue your financial journey, you’ll need to increase the ante with actions geared toward long term payoffs.
For instance, take the sound old example of ‘a penny saved is a penny earned.’ Well, yes you could say that. But a penny saved is also an opportunity to pump up your retirement fund, to pay down your mortgage, or to pay off debt even faster.
See the difference? Take the first bit of advice and increase your energy and action to help your long-term goals.
Next time someone tells you to cut back on your coffee, continue the conversation and ask, Why should I? As you move beyond budgets and frugality, prepare to get a little bit nosy. Asking questions is an important part of the financial journey.
If you’re unsure, if you don’t understand or or if you’re just looking to clarify – ask away! Heed the adage of ‘the only silly question is a question unasked’ if you need a little boost. You’ll only benefit from understanding and having conversations about what you could be doing to work towards financial security.
Seeking to understand also helps you avoid taking poor advice or advice that doesn’t apply to your specific situation.
Understand the impact of time
Time can be your greatest ally or your most fearful enemy when it comes to your dollars and cents. The compounding of your money — or of your lender’s interest — drives on with every day that goes by.
For example, you might decide to save some money through removing a simple ice cream cone from your daily spending. Cutting out that daily ice cream cone addiction is a good place to start in terms of saving a few bucks (and for your future health), but if you’re $100,000 in debt you wouldn’t even break even on the average daily interest accruing on the loan. Having a large principal on your debt will cost you more in interest every single day. Working to do whatever possible to bring that balance down so you can stop paying interest is a big deal.
On the flip side, if you can start investing now then you are giving your principal the maximum amount of time to grow. Waiting only means that investment will be smaller than it could have been.
Expand your horizons
When it comes to financial freedom, of course the little things matter. But the big things – dare I say it in the company of my fellow frugal fighters – matter even more?
Financial literacy doesn’t end at budgeting and thriftiness. It comes from understanding what your money is worth, or potentially worth in the long run. If you’re nervous about planning far, far into the future, then take it a little bit at a time. Just make sure you continue to broaden the timeline as you forge forward. Once you feel like you can budget a day successfully, then expand to a week. From there, a month, a year – and then five. And so on and so forth.
Budgeting is a natural step in the process of building wealth. But as you continue your financial journey, you’ll need to boost your progress by taking actions geared toward long term payoffs.
Education and knowledge is nothing without action.
Don’t fret if you snapped your fingers and it hasn’t happened yet. Give yourself time and opportunity to learn and connect with the transition as you rev up the pace. It’s a journey, after all.