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10 tips on how to improve your financial well-being in the forthcoming year

In this article we have collected for you the most universal tips on dealing with money. They will help you to become financially savvy in 2016. Attention! They all work in the long run but do not give an immediate effect. And if we do not get into details of smart monetary theory, these simple tips will be enough to feel ourselves comfortable while dealing with money and grow richer little by little.

1. Diversify finances

Diversification is subdividing your savings, incomes by various tools into equal shares in order to maintain stability in a crisis situation. Moreover, the diversification can be applied not only to money but also to life in general: to work, recreation, education.

For instance, divide a large deposit into parts and put them into several banks. If something goes wrong in one bank, you can withdraw money out of another bank.

2. Pay yourself

An ordinary person, while receiving a certain amount of income, such as salary, immediately deducts his current expenses (bills, telephone, urgent shopping) and plans purchases, but he remembers about his own development after all, if ever does. Imagine that you have received your salary in the amount of 32000 rubles, not 35000, and the sum in the amount of 3000 rubles directly goes to the assets formation fund.

A pragmatic person tries to separate the sum from the income in order to invest it at once or to save it for his own development and new ideas. Usually it makes 5-10%. As a result, there are always available means to realize new projects, education, trainings- moving forward, and only then the expenses are covered by remaining amount.

This is exactly the rule of ‘’paying yourself’’: from received income save 5-10% for your own development and ideas. Here the main point is to understand that this is not the same as saving money for a car, furniture or a vacation. These are the investments made for the realization of an idea when it appears.

3. Avoid commissions

Try to avoid making payments of commissions for different operations: telephone, banking services, insurance contributions, additional warranties, etc.  Get to know how to handle such things, how to resent extra unnecessary services, do not be lazy.

Examples of commissions: unknown ATMs, mobile banking, an extra warranty for goods, purchasing of useless discount cards, electronic payment via post-terminals, additional services. Even buying of small goods at the cash desk in hypermarket is also considered to be a commission-for standing in a queue. :)

4. Do not lend money to friends

On the basis of my personal life experience and observations of other people I would like to point out some facts: never lend money to your close friends irrespective of its amount. If you want to help, just give him the amount that you can afford. There will be more return in future.

5. Take limited amount of money with you

If you are going to the shop or use any service, i.e. you get into a place full of temptations, do not take your card (at least, first time) with you, but a certain amount of cash that will cover your costs. It works smoothly, however it needs developing such a habit.

Yes, this advice might seem absurd but afterwards, by applying this method in practice regularly you can prevent yourself from doing impulsive shopping or getting services that you do not really need. A plastic card drives you into user trance, as if everything is allowed, and if there are credit cards or overdrafts as well, here your prudent consciousness may not resist it at all.

6. Create financial safety cushion

In books it is often said about financial reserves required for minimum maintaining of your life within 6 months. I think it is unreal in our rapidly changing times. Besides, it is not necessary at all- 2-3 months are more than enough. During this time you will surely know how to get out of any recession situation and will be able to get any job.  

This is your stabilization fund (as in our state). If there occur force majeure circumstances: work dismissal, business collapse, recession and disease— during 2-3 months you have to live at the expense of this stabilization fund until new income appears.

7. Establish a penalty system

You have to fine yourself in case if you exceeded shopping costs, recreation costs, lost money, was too lazy to earn more money. Each person establishes framework of what is permitted and the range of fine for himself.  

The amount should be small but enough for the budget to sense its absence. At the end of month you do not have to return the accumulated money to yourself, as it won’t be a punishment. Think of how you can allocate it. For instance, you can give it to your child, friends or spend for charity-the best option.  Meanwhile, you do not need to explain anything to anyone- you have given the money away, that’s all. You must pay for each fault.   

8.  Use the principle of justification

There is no need to buy something cheaper or get services for lower price: it is fraught with serious consequences both for safety and health.  But you shouldn’t think that the most expensive thing is the best one. A sound approach is needed.

We can use the principle of the golden mean: we sweep away the cheap and expensive one and take something medium.

9. Pay a specialist

Most people try to save money on repair work, health, recreation and food. And they often try to do everything on their own.  But this is not always a good idea.  Such independence can result in waste of time, get on nerves and provoke negative effect.

However, if there is an option to accelerate the solution of the problem and spend the gained time and energy more effectively on something important and useful, it is better to pay for it. Miser pays twice.

10. Do not live just with present moment

Unfortunately, most people try to satisfy their momentary desires: «I want it and all » but the purpose of this desire is not clear. They often do not take into account the perspectives that will bring these expenses in future.  Yes, it is useful to buy a notebook for having a blog, writing a book or a code, but it is useless to have it just for games, series and social networks.   

Learn how to direct your life towards future, not towards meeting today’s needs and gusts that are often caused due to surrounding information environment. A person who is financially savvy possesses an important skill- ability to plan. Yes, plans are not always realized but the important vector of development is preserved.  

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