For more than 25 years, CEOs, business leaders, and entrepreneurs have cited Stephen Covey’s The 7 Habits of Highly Effective People as the business book that transformed their thinking and launched their success. Covey’s advice is timeless and applicable to all areas of life in which people chase big dreams and goals — even saving money.
Here’s how you can apply the “7 Habits” to your own financial life and become a highly successful saver:
1. Be Proactive: Don’t wait until for a financial emergency to pressure you into socking away more money. The only way to grow your nest egg is by starting early and remaining consistent, even when times are good. As J.D. Roth, founder of Get Rich Slowly, reminds us, “Studies show that those without emergency savings are more likely to accumulate debt. It may feel like you can’t afford to have one, but the truth is you can’t afford not to have one.”
2. Begin With the End in Mind: Before you commit to a savings plan, determine what it is you are saving for and work backward from there. Having concrete, written goals is key to achieving your dreams. “Personally, I like to keep quarterly as well as yearly (and even some longer term) goals,” writes Elizabeth Carlassare, AKA Money Girl. “I carry my quarterly goals with me so I can look at them easily and I like to chart my progress as I go.”
3. Put First Things First: Doing the hard work now — like building an emergency fund and paying down debt — gives you the freedom to spend money on the things you love later. Learnvest has an awesome guide to prioritization if you’re unsure where to start.
4. Think Win-Win: Saving money doesn’t mean you have to live like a cheapskate and give up your morning latte. Because you’ve prioritized your financial needs, you know what’s important to you and what you can do without.
Maybe going out and socializing with friends is an important to you, but driving isn’t. Give up your car in favor of public transportation and you’ll gain the financial wiggle room to save money and enjoy life. Now that’s win-win.
5. Seek First to Understand, Then to be Understood: In Covey’s book, he explains that we often jump to a “solution” without first taking the time to deeply understand the problem. If you’re struggling to save money, don’t give up; it could simply be a matter of better understanding the roadblocks in your way. Whether it’s a lousy job market, lingering debt, or high cost of living, truly understanding what’s holding you back allows you to brainstorm creative solutions.
6. Synergize: Create a saving system that is firing on all cylinders to ensure the whole is greater than the sum of its parts.That means if you’re great at transferring money to your savings account every month, make sure you don’t have any debt stunting your potential to sock away more. Saving for retirement? Look out for opportunities to reduce taxes and enjoy higher yields.
7. Sharpen the Saw: The beautiful thing about the human mind is that it’s constantly evolving and growing. When it comes to your finances, you can always learn more and get better — the saw can always be sharpened. Look to classic personal finance books, such as Dave Ramsey’s Total Money Makeover and renowned blogs like Consumerism Commentary to keep your money management skills sharp. If you prefer listening over reading, there are podcasts that can help you stay on top of the changing finance game as you work towards your savings goals.
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