What makes someone a money-savvy person?
I’ve written before how money is a tool and how it can
buy support happiness–helping you afford a roof over your head, food to eat, clothes to wear, and medicine.
Today, I’m sharing how money is only part of a toolset you need on your journey to financial wellness. You can have a six-figure salary and still no closer to your financial or life goals. I experienced this first-hand working as a banking executive and living way beyond my income.
Eventually, I learned from some money-savvy people about three financial practices. But before I share those practices, let’s start by going over some character traits of money-savvy people.
Financial Traits of Money Savvy People
Do you have these money-savvy traits?
Honesty with self
Being honest about your finances allows you to identify past mistakes and confront bad spending habits. You’ll need to acknowledge your shortcomings so you can find the right solution.
Mindful of the future
Living in the moment isn’t a valid excuse for not living in your present financial situation. By continuing to mindlessly spend to afford a specific lifestyle has future implications for your well-being.
Money-savvy people know every financial detail of their lives, from their take-home pay to the true cost of their lifestyle. This helps them live within their means and prevents them from spending money that they don’t have.
Knowing the difference between needs or wants or luxury and indulgence is a key aspect of managing money wisely. Money-savvy people don’t necessarily ban the purchase of the best brands but know what is affordable and within their financial means.
Determined to save
Want to mimic a money-savvy person? Make deposits into a savings account as if it were a required monthly bill payment, essentially paying yourself first. When you start saving, you’ll grow a desire to invest money or finding other ways to grow your savings, not your credit balances.
Time is cherished
Money-savvy people understand time is the most valuable asset one has that is finite. When you manage your money well, you’re also managing your time. Most people make money by trading time for a paycheck. More hours worked means more money made but has an effect on the amount of time you get to spend on loved ones or on passion projects.
These traits lead to sound financial practices, such as budgeting, monitoring credit, and shopping for the best products and services.
Best Financial Practices of Money-Savvy People
These financial practices, you’ll come to discover, are not a secret, but its simplicity makes most people overlook them. These are foundational money practices everyone should have to achieve their goal.
Budgeting can be done using a simple spreadsheet or a budgeting app. Money-savvy people use budgets to create a lifestyle built on sound financial practices. A budget is a living document that needs to be created, monitored, and adjusted. It’s meant to help you allocate your time and money on what’s important to you.
Credit is a tool and can be used as leverage to create wealth. However, most people use credit to buy live their income which leads to debt. Money-savvy people don’t carry consumer debt and monitor their credit to ensure they have access to capital for investment purposes (rental properties, business venture, and education). Monitoring your credit report means you’re managing credit and you can keep a bird’s eye view by tracking your credit score.
Similar to shopping for bargains, money-savvy people shop for financial advice, information, and products. They know that terms and conditions can change, so they periodically evaluate existing relationships. Keep an eye out for new banking options, better interest rates, credit cards, and insurance plans.
We all want to make better decisions that can lead us to financial freedom. By ingraining the traits and following the practices of money-savvy people, you too can reach your state of financial well-being sooner rather than later.