So You Make Better Financial Decisions

Making smart financial decisions isn’t always the easiest, but there are several good ways to learn how to manage your personal finances. Read our 4 tricks on how!

Review your income and expenses

The first thing you should do is look at your income. Income includes everything from your salary to various contributions and returns from saved investments. Once you have written down your income, it is important to find out what your fixed and variable expenses are (calculate the last twelve months). Then you have a clear overview of how much money is coming in and what money is going out. Fixed expenses are, for example, housing costs and loans, while variable expenses are food, drinks and so on. The movable ones are usually easier to influence. Regardless of income, the most difficult thing is often not to spend exactly at the limit of one’s means. Therefore, it is usually not an income that is too low that causes it, but it is a matter of cutting down on expenses, living below your means and seeing how much money you can save each month.

Create a monthly budget

When you have a clear overview of your income and expenses, that is the basis for the budget you need to stick to. The decisions to be made in the future are made based on the budget. Sometimes the decision is to shop, sometimes to save the money and at some point you may have to borrow money, for example in the event of unexpected events where the sum exceeds what you have budgeted or managed to save up.

Read more about how to create a good budget here.

In addition to your main budget, you can set up a separate budget for things to spend money on when you want to add a golden edge to everyday life. It can be anything from buying home extra good food or some gadget that simplifies life. Set aside money that you actively choose not to spend on an unnecessary impulse purchase and save it in a separate savings account . Don’t touch them for at least three months and see how much you managed to save!

Think long term

Think before. Do you really need to buy what you are currently considering? Thinking long-term is of course easier said than done, but impulse purchases are a big culprit when you’re trying to create good financial habits. You are constantly surrounded by offers and suddenly you have clicked through, activated the impulse and bought something you want, but absolutely do not need or can afford. Here are three tips on how you can think long-term and sustainably:

Compare prices

Do your research and check if the offer is really as good as it seems – and keep in mind that it’s actually only a bargain if you really need the product being sold!

Sleep on the thing

Give yourself time to think about it before you decide to make a purchase. In this way, your “want-need” is paused and you have time to decide whether it is an unnecessary purchase or not.

Save big purchases for clearance sales

If you’ve decided to buy something, save it to a watch-list such as Price-runner . Then set what you think is a fair price to pay and wait for the product to go down to that price! Alternatively, you can wait until big sales such as Black Friday or the Midday Sale for these purchases.

Avoid trading under strong emotions

Many unnecessary purchases are often made under the influence of strong emotions, which means that you think less rationally and spend money on completely unnecessary things that just become an expense. You shop to quickly get in a better mood, but really only postpones the problem and creates more stress. For example, this is why you shouldn’t shop at the grocery store when you’re hungry because you’re guaranteed to end up buying more than what’s on your shopping list. If you are satisfied, happy and rested, it is easier to resist purchases that you do not need.