Spending Money Wisely Is Harder than Earning Money. Find Out If You Are Smart with Money or Not.
Whether you work hard or work smart for your money, once you have it, there are clear signs whether you are smart with it or not. One thing harder to do than make money, is to hold onto it.
We’re going to look into 15 signs that you’re smart with money, before we get going don’t forget to like and subscribe to Alux for even more content made with future billionaires in mind. This is probably exactly why you’re here, and that ties me perfectly to the first point.
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You Know What You Know…and What You Don’t
People who are smart with money don’t pretend to know everything and seek advice from experts, that means finding a trustworthy financial advisor. On top of that, there is so much great stuff out there that you can read and watch to get great financial knowledge on topics that confuse you.
Alux is one of those sources of great advice, which shows you already show that you are smart with money. Support our YouTube channel and like and subscribe so we can continue producing high quality content for you.
If It Ain’t Broke, You Don’t Replace It
People who are smart with money only spend it when they need to. They don’t replace a TV if their current one is still doing the job, the same for cars, sports gear, or tech. While it’s always nice to splurge and spoil yourself with something new, people who are smart with money show that they aren’t on a never-ending quest to always have the latest and greatest and accept that there will always be upgrades and improved versions of things.
This is also a common trait of “old money” too, see what else links you to the blue bloods in our video on the topic:
You Have a Budget
If you ask around, most adults have a rough budget, but when it comes to how many actually stick to it, the numbers drop. It’s one thing to have a budget, but people smart with money stick to it.
This way they are reminded what their end goals are, which helps keep them on track when the temptation to spend arises. In an Insider Article, Tamara Dervin, a Chicago-based personal finance coach and certified financial educator said that “It’s important to know exactly how much money you make and where it all goes each month.” We tend to agree.
You Have the End in Mind
While a quick spend or a car upgrade is tempting, people who are smart with money have a great end goal in mind. Perhaps it’s to be able to retire by a certain age or become financially independent from your employer… whatever it is, if you’re always looking to your big goals instead of giving into the impulse purchases then you’re showing signs of having money-smarts.
Is there one golden rule to end all your money woes? Yup there is, keep listening because it’s coming up.
If you want to achieve your financial goal, start with making small changes in your money habits. Check out 15 Small Financial Improvements to Start With.
You Buy Luxury with Money You Have
They say, “Rather the devil you know than the devil you don’t.” Well, the same can be said for money. Rather spend the money you have, then the money you don’t. Those who are smart with money make sure they aren’t enjoying a luxury lifestyle on credit that they don’t possess.
Not only is it really expensive, it is also a dangerous game to play. Before you know it, you’ll be enjoying the view from the sidewalk while sitting on that couch you bought on credit you couldn’t afford.
The highest interest is paid on short term loans like retail credit deals and credit cards. Smart money knows this and avoid it.
But not all credit is bad…
You Leverage Credit Wisely
Smart money knows that there is plenty of opportunity to grow your wealth through credit. But this is in very particular circumstances where the item you’re buying on credit continues to gain value that exceeds the interest you are paying on it. This is usually the case when it comes to buying property or businesses.
You Don’t Pay Unnecessary Bank Fees
Bank fees are near impossible to avoid altogether, but there are plenty that you should never have to pay. With a little smarts, you won’t have to pay exorbitant bounced payment fees, late fees or short term interest.
Understand the banking products you have, make use of the free transactions like online payments or setting up debit orders instead of doing an EFT. Check to see that the bank perks you get are worth it. Some of the time you’re being charged a monthly fee that far exceeds the benefits you’re receiving.
You Shop for Necessities with a Plan
You know we love a list; lists mean you have a plan. And failing to plan means planning to fail. When you shop for home or business it is always wise to shop with a list that has your budget in mind. It’s easy to get caught up in the frenzied spending in shops or online stores, they are literally designed to cause this. Having a list means you won’t be way laid or end up with armfuls of non-essentials and nothing you actually need.
Aluxers, the younger you start learning about money, the better. Which is why we suggest you listen to Smart Money Smart Kids – Raising the Next Generation to Win with Money by Dave Ramsey, Rachel Cruze. It’s available on Audible and we’ve got a free download for you at alux.com/freebook. It’s received over 4,000 5-star ratings.
You Have Insurance
Accidents happen, but people who are smart with money don’t get bothered by this. Their monthly contribution to short term insurance ensures that they have peace of mind that their property, both personal and business, is insured against loss or damage. That way in unforeseen circumstances of loss they are covered. Its one way of predicting future financial longevity instead of having to constantly maintain a huge back up bank balance to keep you safe.
You Have an Emergency Saving Fund
People who are smart with money have nerves of steel because they are able to maintain an emergency saving fund. This is a feat or strength like no other on the planet, having money available and not spending it, and continuing to add to it is a real-life superpower.
If you are finding it hard to start, then take a tip from us, automate your savings. Even if it’s a small amount at first. Set up a monthly or weekly transfer into a savings account so that you don’t have to have the personal strength it takes to make the payment yourself. Once you see that savings balance grow, the pay off becomes clearer and you will find it easier to increase the amount.
You Protect Your Salary
Smart people don’t rely on their employer for security. They take their financial security in their own hands. This is done with a salary protection policy. Whether as an add-on benefit to your banking, or through a financial insurance broker, adding a salary protection policy is essential to upping your financial IQ.
Anything can happen, Covid-19 is a great reminder of this, so ensure you protect your monthly income while you give yourself time to find new income.
You Know Your Credit Score and Are Keeping It in Check
People who are good with money know that a credit score is key to building wealth. If you’re levelling up your wealth through business or property you will require loans.
Your credit score is standing between you and getting finance to access a great opportunity, so be sure that you always know where your credit report stands, and how you can keep it looking good.
Ensuring payments don’t bounce, service your credit card and overdraft regularly and keep away from subscriptions you can’t afford will mean you keep a positive rating. Having a small amount of savings in your account can also increase your credit score.
You Don’t Double Dip with Debits
A quick way to lower your credit score is to let payments bounce. People who are smart with money know what payments come off when and ensure there is always money in the account for them. But this can get confusing and out of hand fast if you have too many.
Don’t sign up for subscriptions or debit orders just because your credit allows it. Do you really need the product your bank or internet provider is trying to add onto your monthly premium? Probably not, so don’t let their “limited offer” sales pitch throw you off your end goal.
You Don’t Pay More Taxes than You Need To
People who are smart with money are smart with taxes. They know that it’s not necessary to know all the ins and outs of tax codes but rather keep good records and employ the help of a qualified tax practitioner. They will manage your money to maximise tax benefits and savings.
People who are smart with money ensure that they have a tax practitioner who is up to date with the latest laws and that they are paying just the right amount of tax. Not too much, but not too little either to avoid nasty surprises.
Shop around to Get a Good Deal
No matter how much money you have, there is no shame in shopping around to ensure you’re paying the right price.
No matter what you are getting, from a home loan to a new geyser, don’t feel intimidated into taking the first quote you get. People who are smart with money will shop around for the best deal because geysers and home loans will be with you for a long time.