Awa Sow
When it comes to money, nobody will ever have your best interest at heart more than yourself. So it’s important to educate yourself about money and start making positive changes in your life and for your future. One of the ways of achieving this is by being financially Savvy.
What exactly is a financially Savvy person?
A financially savvy person is someone who deals with spendings, credit and other money matters. Financially Savvy people know how to manage their finances in an orderly fashion. Essentially, the overall idea of being financially savvy means having a handle on your money and maintaining a healthy financial situation.
In order to master being financially savvy, you need to be able to have a financial plan for the present and for the future. Are you financially savvy? Below are 7 habits that financially savvy people practice to have a better handle on their finances.
1. Make a budget
In an earlier post, we talked about budgeting which is a strategy that helps you stay on top of your finances and keep track of your goals. The first thing a financially savvy person does is budget to make sure everything makes sense financially. If you want to achieve your financial goals, you must have a plan and a budget. Your budget should include everthing you spend your money on, even debt repayment and savings. If you don’t know how to create a budget you can check out my earlier post on budgeting here.
2. Spend within their means
This should be an obvious one. You should only be spending money you actually have in your bank account. You also need to make sure what you’re spending money on fits within your budget. This is why it’s very important to have a budget. If you make a budget, you’ll know exactly how much money you have to spend and how much money you have left for any extra purchases.
3. Save
Financially savvy people plan for emergencies and save in case they’re stuck in such a situation. Dedicating a portion of the income every month for emergencies makes it so that debt is not used and also prevents from paying high interest.
Financially Savvy people also know to save for retirement. Your retirement saving is done while you’re still at work. So you can only do this during your working years to make sure you have a solid financial future. So make sure you have a certain percentage of your salary going towards your savings goals.
4. Use credit wisely
Financially savvy people use credit wisely to advance their financial situation. You should know that there is good debt and bad debt. Good that is if you use credit to positively inpact your financial situation. This means for example, that you are using debt to create a business that allows you to earn more money and therefore increase your purchasing power and your savings potential. On the other hand, bad debt is credit that takes money out of your pocket without giving you any extra money in return or any advantage financially.
Most credit cards charge about 20% interest so avoid this to the best of your ability. I have nothing against using credit cards regularly. In fact, I use mine for all my purchases because I receive great cash back on all of them. For that reason, I use it whenever I am making a purchase so I can earn cash back and I pay every cent back when my payment is due to avoid paying interest.
Debt can be very useful if you know how to use it right and a financially Savvy person knows how to use debt for their financial benefit.
5. Always find ways to earn more
Not only do financially savvy people find ways to cut down on their expenses, but they are always trying to earn more money to increase their purchasing power. There is a limit to cutting down on your expenses. If you want to be more financially stable, you need to find ways to make more money. This will help to boost your savings and your wealth.
6. Increase their financial knowledge
Financially savvy people are always in a learning mode, trying to deepen their knowledge of personal finance. Reading books is a great way of getting the experience and point of view of a lot of different people without going through the mistakes these people made.
By reading books you not only gain the experience but you also save a lot of time. If you only read two books on Personal Finance you will know a lot more about money than the majority of people.
You can read books electronically on your phone or tablet without even needing to get a hard copy sent to you. Now, I know what you’re going to say: that you don’t have enough time to read a book. Well, I’m the same way. But that doesn’t prevent me from educating myself. You can now listen to audio books as opposed to reading a book. You can listen to these on your way to work or when you taking a walk. So there is really no excuse for you to not improve your financial education and be more financially savvy.
7. Ask for advice
The most financially Savvy people know when to ask for advice from professionals. This might be from accountants, lawyers or financial planners. Experts can introduce you to tax deductions you were not aware of for example or account types or savings possibilities you didn’t know about. It’s good to surround yourself with professionals who can help you facilitate your financial education and help you be more financially savvy.
Bottom line
Financially Savvy people have a lot of different traits. If you’d like to be financially savvy start by implementing a few of these ideas and you will be well on your way to a better financial future.
