5 Habits of Financially Savvy People
I'm still trying to figure out my debt situation (medical school is a LOT OF MONEY....). After reading so many iterations of blog posts about personal finance and saving, I've distilled it down to 5 habits that financially savvy people share (you know, those people who just manage to save money and do it well without living like a homeless person).
1. FINANCIALLY SAVVY PEOPLE QUESTION PURCHASES (BEFORE MAKING THEM).
Ever feel that urge to buy those awesome looking skinny jeans that are 30% off?! I mean, they're ON SALE! Any financially savvy person would questions whether or not they actually need those jeans, and think even one step further and question if they can get those jeans even cheaper by looking elsewhere (like Nordstrom Rack instead of Nordstrom). Although they may have the initial impulse to buy, they question themselves first instead of buying on impulsivity.
2. FINANCIALLY SAVVY PEOPLE THINK LONG TERM.
I know those colorful skinny jeans on sale is a “MUST HAVE,” but think of your future self before making impulsive purchases. One trait of financially savvy people is they think of their future selves, meaning they ask themselves the question “Do I really need this?” Another habit that suggests long term thinking is taking a breather and mulling over the decision to buy before purchasing. Often times, taking that one or two days to think will result in not purchasing rather than purchasing.
3. FINANCIALLY SAVVY PEOPLE LIVE WITHIN THEIR MEANS.
I had a friend of mine who had a new job with a 5% raise and decided to purchase a brand new car. Not that she needed the car (her old car was perfectly fine) but she wanted to ‘reward’ herself for a job well done. It’s not that buying yourself something as a treat or reward for something amazing that you did is a bad thing, but perhaps buying a new car isn’t the BEST way to spend the money (cars depreciate in value over time and you also have that monthly payment and increase in car insurance premiums to deal with). Financially savvy people tend to live within their monthly income and avoid accruing debt as best they can. They save up for that vacation instead of booking one at a time when they can’t afford it and ‘worry about the consequences later.’
4. FINANCIALLY SAVVY PEOPLE DON'T BUY NEW THINGS.
Buying used is not a bad thing, nor are you getting any poor quality if you buy used. Some things that financially savvy people purchase that aren’t NEW items include large pieces of furniture, books, sports equipment, or baby clothes. Not everything that’s purchased needs to be brand new and shiny!
5. FINANCIALLY SAVVY PEOPLE TAKE ADVANTAGE OF FREE MONEY.
Money doesn't grow on trees (although don't we wish it would!), but 'free' money can be found if you know where to look. Credit cards with reward points are the best examples of free money. Chase Sapphire Reserve gives credit card holders 100,000 reward points for spending a certain amount in 3 months; that's equivalent to about $500 in airfare or hotel. Other credit cards also offer similar sign-on offers; I use NerdWallet to compare what credit cards work best for my needs and lifestyle. Now, this doesn't mean go and sign up for every credit card available. Once you have a control of credit card debt and managing a credit card (for example, pay in full every month), then I’d suggest taking advantage credit card deals.
Money management and saving is a habit that can be developed - and as with all good habits, they take time and continued work. I'm still learning about trying to save money (as I have massive amounts of loans!), but thinking of the long term and of my 'future self' does help decrease the many impulsive buys that might otherwise result. I'm working on my self control this Christmas - let's see what happens!