The best way to handle your finances better is to adopt a change in lifestyle. If you find that most of your money is being spent on gifts for others or luxuries for yourself, you might want to reconsider how you spend before you near retirement age.

For most, when we talk about lifestyle changes as we age, it is assumed that they need a retirement plan or need to attend a 401(k) seminar – or simply schedule an appointment with a financial advisor. Yes, you need to handle your money better, but the most important element is to find happiness first.

Start Living Life for Yourself

People who aren’t truly happy with their lifestyle often find themselves spending more on things they don’t really need as they look for happiness in the material aspects of life. You should start living for yourself.

Yes, you can’t just up and quit everything, but you can definitely start incorporating elements of what you love into your life. For example, if you’re an accountant who wanted to be a scale modeler, you should start doing something about it. Start bringing material home for your model and slowly start building. People who are happy with their lifestyle are content with what they have and therefore aren’t as cavalier with money.

Practice Restraint & Be Strict

If you have a credit or debit card, withdraw enough money to last you two weeks and then give the cards to your significant other or parents. Try to only use cash. When shopping with cash, you will have a better idea of what you can and can’t afford. Keep reducing the money you keep for 2 weeks until you find equilibrium.

Live on a Budget & Focus on Savings

A common mistake people make when looking to save is that they spend what they need and save what is left. They adopt the following formula:

Income – Expenses = Savings

This isn’t the right approach. One important lifestyle change that you should focus on is to create a budget, but when doing so, change the formula a bit. Instead of saving what’s left, save a sum and spend the rest. Use the following formula:

Income – Savings = Expenses

Fix an amount you are going to save and spend accordingly. You will find that your lifestyle will change automatically.

These three little changes will help you create a foundation for further changes in your lifestyle. Remember, while trying to implement changes, never underestimate the importance of financial literacy. Keep learning more about your finances and implementing the changes you learn about.

Looking for some extra guidance or someone to hold you accountable? Our lifestyle and financial advisors can help you analyze your current situation and give you tailored advice on managing your lifestyle and any changes that you may need to make.