Creating and staying on a financial diet can mean the difference between financial success and failure. That’s why it’s so important to have the tools and rules in place when determining the financial diet that will work best for you.
Taken from the website thefinancialdiet.com, here are what they believe are the ten ingredients you need for a healthy and successful financial diet (with a bit of additional explanation to help clarify a few things)…
The Financial Diet’s 10 Commandments
- Always Have a Budget
No matter how much money you have, you need to know where your money is and where it’s going. If you lose track of your money’s inflows and outflows, you’re putting your financial health at risk.
- Know the Basics
Know your credit score, your investments and your debts. It’s important to have a clear picture of your financial situation so that you’ll know the next steps to take – or not to take – when it comes to your financial future.
- Buy Fewer Things
When making purchases, focus more on quality, versatility and usefulness than instant gratification. Items that last longer and have a variety of uses can help save you money now and in the future.
- Think “Long-Term”
Make your daily spending decisions based on the long-term. A custom-made coffee drink every day or a trip to Europe six months from now? New clothes every week or a down payment on the house of your dreams? Keep the future in mind.
- Splurges – Exception not the Rule
Yes, keep indulgences and splurges as part of your life, but consider them the rare and exciting things that they are. Too many splurges are no longer treats when they become a lifestyle.
- DIY (Do it Yourself)
When you learn how to do things like cook, make repairs, and clean the gutters yourself (ugh), savings add up. Invest in your skill sets as much as you do your bank account and your finances can start getting healthier immediately.
- Always Have These 3 Things
A side hustle (a way to make money outside your 9-5 job), an emergency fund and a Plan B (i.e. should you lose your job, get sick, etc.). These 3 items help you create more security in your financial life… and your emotional one, too.
- Ask the “Future” Question
Ask yourself where you want to be in six months, two years, ten years. Picture the goals, set your mind to them and then figure out a way to start making that happen today. It’s hard to know where you’re heading if you don’t know where you want to end up.
- Happiness is a Byproduct of Freedom
Read that again… Happiness is a byproduct of freedom. When you work toward giving yourself options, rather than “things”, you’ll find ways to be able to do what you want, when you want and how you want. When you stick yourself with unescapable debt or unending bills, freedom tends to move further and further away.
- Guilt isn’t Productive
Like eating a piece of cake occasionally doesn’t ruin a food diet, splurging on a weekend away or a few dinners out doesn’t ruin a financial diet. As they say at financialdiet.com, guilt isn’t productive, but getting up and doing better tomorrow is!
Communicate with myFICO forums members and see how many are following these important commandments.