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Financial Diets vs. Lifestyle Changes


Financial Diets vs. Lifestyle Changes

If you’ve ever tried to shed a few pounds, you know there are plenty of diets to choose from. And whether they’re dictating how much you can eat or what types of foods are acceptable, most diets have one thing in common – they’re unsustainable.

Sure, they might provide a quick fix to get you back in your favorite pair of jeans, but they aren’t going to keep you healthy long-term. The same “diets” are commonplace when it comes to your finances. You can set goals to save more money or cut back on frivolous spending, but long-term success will likely still be out of reach without first changing your perceptions of money.

True success comes down to lifestyle changes – altering how you view and interact with money (or food).

What are lifestyle changes?

When you hear the term “lifestyle change,” you probably imagine an extravagant life transformation. Luckily, in a financial sense, it’s generally much simpler.

The goal is to alter your spending and saving habits to improve your financial well-being. As you’ll soon discover, there are many small moves you can make that will compound into something much greater over time.

Examples of lifestyle changes:

Altering your spending or saving habits doesn’t have to be extreme. There are many little tweaks you can make that will have a significant impact on your finances over time.

  • Automate your savings: Use payroll deductions or automatic transfers to ensure money consistently finds its way into your savings account. Once it’s set up, you don’t have to worry about it again.
  • Balance your budget: Creating a budget is wise – balancing it regularly is crucial. Spend 30 minutes a week updating and balancing your budget. It’s an excellent way to remain mindful of your spending and ensure you’re on pace to reach your goals.
  • Set spending limits: Finding ways to restrict how much you spend at a single time is wise. There are many ways you can do this, including:
    • Credit card alerts: Most credit cards today allow you to set spending limits or alerts when you reach a specific dollar amount. Keeping your spending below 30% of your credit limit will also help boost your credit score.
    • Waiting periods: Set a rule with yourself that any purchase over a specific amount requires a 72-hour waiting period. A few days to think about it might cause you to change your mind.
    • Cash allowance: Give yourself a cash allowance for the month. Once the money is gone, it’s gone. People tend to think harder about purchases when they visually see the money in their wallet disappearing.
  • Analyze trade-offs: Every decision has a trade-off. Back to our food examples, you can eat a piece of cake now, but you’ll have to hit the treadmill for 45 minutes later. Likewise, you could have more money for your yearly vacation if you buy a cheaper car.
  • Round-up your payments: When making your loan payments, try to round up the amount to the closest $50 or $100. For example, if your payment is $356, make a $400 payment instead. Every extra bit will help you repay the loan quicker and reduce the amount of interest paid.
  • Pay yourself first: Make your future self a priority. Transfer money from every paycheck into your retirement accounts immediately. Then, use the remaining funds to cover your bills and other expenses. 
  • Factor hours worked: Determine how much you make per hour after taxes. Then, use that figure when making purchases. For example, if you make $15 an hour and a new top is $60 – is it worth working 4 hours to get it?

We’re here to help

Lifestyle changes pertaining to your finances don’t have to be extreme. Start slow and work to become more conscious of your spending and saving practices. Simple tweaks can lead to significant results over time.

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