How to change your spending habits

Six Habits to Adopt for Managing Money Habit #1: Keep track of your finances. Being able to measure inevitably leads to being able to understand, and being able to understand inevitably leads to being able to change. Without consistent, organized and accurate records, a financial plan is impossible to achieve. Therefore, it is essential to keep a detailed record of your income and expenses at the beginning of your financial plan. A good record will enable you to:

1. Measure the financial position you are in - this is the basis for a sound financial plan

2. Effectively change your present financial behavior

3. Measure the progress you have made in getting closer to your goals Particularly important. It is important to note that keeping good financial records also necessitates the creation of a profile so that you know your income, net worth, spending, and liabilities

Habit #2: Clarify Values and Economic Goals

Knowing your values will allow you to establish economic goals that are clear, unambiguous, realistic, and somewhat feasible. Lacking clear goals and direction, you can't budget correctly; and without sufficient reason to discipline yourself, you won't be able to reach your desired goals 2, 20, or even 40 years from now

Habit 3: Determine Net Worth

Once the economic records are in order, figuring out your net worth is easy -- and it's easy. --which is how most financial experts calculate wealth. Why must you figure out net worth? Because only by knowing your net worth each year will you be able to keep track of how far you've moved toward your goals again

Habit 4: Knowing your income and spending

Few people know exactly how they spend their money, or even how much income they actually have. Without this basic information, it is difficult to create a budget and use it to rationalize the use of money, to figure out what to spend, and to make reasonable changes in spending

Habit 5: Create a budget and refer to its implementation

Wealth is not about how much you've earned, but rather how much you have left. Budgeting may sound boring, tedious, and overly contrived, but it's a great way to find out where large sums of money are going in the little bits and pieces of your daily spending. And, a specific budget is good for achieving our financial goals

Habit #6: Cutting back on expenses

Many people complain when they first start out that they can't come up with more money to invest in order to achieve their financial goals. The truth is that goals don't depend on big investments to be achieved. Cut back on expenses and save every dollar, because even a small amount of investment may lead to a not insignificant amount of wealth, e.g., what is the result of saving an extra $100 every month? If you start investing at the age of 24 and get a 10% annual profit, at the age of 34, you will have $20,000. The longer you invest, the more pronounced the effect of compound interest becomes. The profits from saving and investing are even more obvious as time goes on. So the earlier you start and the more you save, the more your profits grow exponentially