This post offers you three suggestions for enhancing your financial health via spending control techniques and savings routines. Taking up these kinds of activities may significantly enhance your wellbeing, especially in terms of mental health and wellbeing.
1. Adopt savings habits
This tip is perhaps the most difficult to apply, due to the need for self-control to resist some impulses inherent in everyday expenses. However, the tip is simple: don’t consume more than you need .
There are countless money-saving habits , and some of them can even be fun. Have you ever thought about the daily car journey you take to work or the gym? If you drive these routes, consider carpooling with other people; consider family, acquaintances or coworkers, and take the opportunity to socialize.
Not all of these habits have the potential to entertain you, and some are easier to adopt than others . So, you should consider:
- Reuse everything possible in the kitchen (vegetable and vegetable peels are great for making natural and tasty broths);
- Avoid long , slow baths;
- Save water while brushing your teeth;
- Pay attention to the energy efficiency of the equipment you have (or buy), especially light bulbs;
- Do not go shopping when you are hungry , for it is a way you will find harder to refuse the urge of buying foodstuffs that are not necessary.
Now, this list could continue but, it’s simple: the main thing is to start acting — in your life — with the savings mindset . In this case, the habits begin to emerge in a natural way.
2. Create an expense management system
It’s not always easy to effectively manage your income . There are many variables involved: fixed and variable expenses, price increases and decreases, and even special and unexpected needs. Therefore, it’s important to be prepared for any setbacks. This is where expense management methods can be very useful.
The 50-35-15 system consists of allocating a percentage of the monthly budget to different expense categories:
- Essential fixed expenses (50%) – this includes housing expenses (whether rent or credit payments), transport, food, water, electricity, gas, telephone, internet, etc.;
- Lifestyle (35%) – this category includes expenses such as going to restaurants, gym memberships or streaming services, beauty services, etc.;
- Savings and emergencies (15%) – if you do not have an emergency fund, you should start by accumulating money in a separate account until it reaches approximately 6 times your monthly salary. When you reach this amount, start saving 20% separately each month. Occasionally, if you need to use the emergency fund (for example, if your car or an appliance breaks down), allocate this 20% again until you reach the predefined amount.
50-35-15 method in practice
For example, a person who receives €900 net per month:
- Essential fixed expenses – €450
- Lifestyle – 315€
- Savings and emergencies – €135
The percentages presented are intended to be indicative only and to help improve the perception of all existing expense categories. Given the current economic situation, it is understood that these percentages may not be within everyone’s reach. Depending on the monthly net salary and essential fixed expenses, the percentages may eventually be readjusted. However, a balance between the categories must be maintained.
Note that the goal of this method is to impose quantitative limits on essential fixed expenses and lifestyle expenses , which generally represent the vast majority of monthly expenses. The category that will help you the most is savings and emergencies, by improving your financial health. It is with this money that you should make plans for the future and make your dreams come true, so the higher the percentage you can allocate, the better!
3. Study, learn, and apply
It is often said that the best investment is in ourselves . And in this case, it really is. The best way to adopt new savings habits and improve your personal finances is through constant learning. New content is published regularly, with different ideas and approaches to these topics. Analyze each one and decide if it makes sense for your personal and financial life.
Financial health and well-being
It refers to the way in which one manages money matters. If you are balanced in your finances, save regularly, and can absorb an unexpected expense, then that means good financial health and well-being.
This concept of health is as important to physical and psychological health, for both are interrelated. Bad financial health has a tight connection with stress and anxiety, which lies at the root of many health and wellbeing issues.
Hence, you must take initiative to proactively improve your financial health by continuous learning and adopting the habits of savings and expense management methods.
The goal of this process is not to make you live by the money you spend ; rather, it will reduce the need to constantly worry about financial decisions as a result of adopting savings habits and expense management methods.