What they tell you about the financial habits on social media might not be the truth

Our comparison culture puts a lot of pressure on everyone. Social media platforms like Instagram, Twitter or Facebook are a minefield for those struggling with money. We are increasingly exposed to a culture where people live in style, post about their perfect lives and appear to have it all together. Being swamped by such an abundance of perfection and people living lavishly may understandably make people feel embarrassed about their financial situations. Yet we still try to keep up appearances on social media.

But stop stressing. Even though it may seem as though everyone has loads of money to spend, according to a recent survey in the New York Times, most people fake their finances on social media: 3 out of 5 people aren’t painting a true financial picture

Build good financial habits

Stop comparing yourself to the lives of the ‘wannabes’

It’s time to stop comparing yourself and your circumstances to the ‘so-called’ fabulous lives of others. This pressure from social media can make it hard to take responsibility for your financial future.

Why not spend money on what really matters?

Money doesn’t have to be a source of worry and stress. Even little changes can help free up your hard-earned dollars so you can spend on things that are important, rather than worrying about what other people’s lives look like on social platforms.

If you find managing money difficult, try focusing your attention on where the real change needs to happen. and the good news is that it’s never too late to start.

Managing your finances doesn’t have to be intimidating

There are plenty of ways for people who have been struggling with their money situation to get help, at any age or stage of their lives. It doesn’t have to be overwhelming.

If you set goals for yourself, start saving and develop good financial habits in your 20s, you will be in a much better place financially when the time comes to buy a house, go on that huge holiday, retire or if there’s a financial hiccup or emergency.

Establishing good financial habits

In your 20s, you establish financial habits that will follow you throughout your life, both good and bad. So, the earlier you start developing good financial habits, the better.

Managing money better can begin by simply talking about finances with people in your life you trust. This can ease the stress and open the door to new ideas.

Great suggestions on how to invest in yourself and your financial future

The most important step in taking control of your finances is realising that better money management isn’t just a matter of making sure your income keeps up with your monthly expenses. It’s also about taking a proactive role in managing and developing healthy money habits.

5 steps you can take to move toward managing money better

  • Practice self-control: pay with cash, not credit
  • Use a finance app or monthly budget
  • Build an emergency fund
  • Start saving for retirement
  • Start saving up for a deposit, for whatever it is.

Put all your everyday purchases on a debit card instead of a credit card, which is actually a high-interest loan.

Credit cards are certainly useful, but it is essential to use them to your advantage and not to the advantage of the lender who profits from you racking up interest-bearing balances. Keep credit cards for emergencies only and always pay your balance in full each month, otherwise, you will still be paying interest on a pair of shoes or a bottle of wine in 10 years’ time.

Never let your expenses exceed your income, and always keep your eye on where your money goes.

Finance apps, such as Mint, can be a great way to make your financial life less stressful and help you develop good financial habits. By helping you get organised, these tools can make budgeting, earning, and saving easier. Once you start tracking how you spend your money, realising how the cost of buying coffee from a cafe every morning adds up over the course of a month can be a valuable wake-up call. These apps can sync with your bank and credit card, if you still use one, to help you keep track of spending, and savings and can help curb those frequent splurges so you have more control of your finances and they can pay bills automatically each month, avoiding late or missed payments. Using a financial app can help you create a workable budget and stick to it.

One of your first goals of managing money better should be an emergency fund.

You should “pay yourself first” and save money for emergencies. This will keep you out of trouble financially, and help you sleep better at night. No matter how little you earn, there are always ways to put at least a tiny bit into an emergency fund every month, preferably a high-interest savings account where you can’t tap into it easily: only in an emergency.

Plan for your retirement well in advance—right now.

It’s all about the magic of compound interest. or ‘interest on interest’ Set yourself up to earn interest only on the principal as well as interest so your money grows much faster. For example, if you start saving $100 a month, averaging a positive return of 1% a month (which is 12% a year), compounded monthly over 40 years your retirement account will contain a bit over $1.17 million. Take advantage of KiwiSaver.

Stop treating savings as optional.

It’s all about the essential life skill of delaying gratification: wait until you’ve saved the money for your toys, treats or your very own home. Getting into the habit of saving and investing will help you save for that deposit. Spending less to boost your savings is about sensibly cutting living costs. A lot of expenses are more in our control than we think. We get into some bad financial habits and it’s hard to see how to break them, but you can change things. You can tweak your financial life to save money. It means you have to cut back on the ‘nice to haves’ and not give into the temptation to spend, spend, spend, but you don’t necessarily have to deprive yourself to do it.

Good money management can give you a better future

Wise money management can be the answer to several of your goals, help you out of some of the uncertainties of life and provide opportunities to enjoy some of the very nice things that life has to offer, some of those things the ‘wannabes’ on social media might only be dreaming about.

For information on independent confidential budgeting services or advice, visit www.moneytalks.co.nz.