Are you eyeing that dream house or shiny new car for 2024? Then it’s time to give your finances a health check to ensure you’re ready for these big buys without stretching your budget too thin. Most Americans, according to CNBC, live paycheck to paycheck and might need to borrow for life’s major purchases this year.

Insight: “Every dollar spent is a reflection of your values and priorities.”

The entrepreneur recently chatted with Chelsea Fagan, CEO of The Financial Diet, about making smart choices when it comes to significant purchases. Fagan, who transformed her troubled relationship with money into financial expertise, shares valuable advice on approaching big-ticket items.

“Not all major purchases are created equal. Understanding their long-term value is key.”

Fagan suggests first evaluating the long-term value of a purchase. While a house might grow in value, a car usually won’t. Another important factor is how this purchase fits into your overall budget, especially in areas where living costs are high.

Insight: “Each big spend reshapes the landscape of your monthly expenses.”

Using a budgeting app like Kelley Blue Book My Wallet can help you see how each expense fits into the bigger financial picture.

“Every choice you make with your money involves trade-offs.”

Consider the hidden costs, like how a cheaper home might mean higher transportation costs due to a longer commute. Education, another major investment, should also be weighed for its return on investment.

FAQs:

• How should I approach major purchases?

  Ans. Evaluate their long-term value and how they fit into your overall budget.

• What’s a simple exercise to develop better spending habits?

  Ans. Review your recent spending and highlight purchases you don’t recall; it’s eye-opening to see where your money goes unconsciously.

“Mindless consumerism often creeps into our spending unnoticed.”

Fagan advises a simple yet effective exercise: go through your bank and credit card statements from the past three months. Highlight any purchases you don’t remember making. This activity is a powerful “psychological practice” that can strengthen your money habits, helping you identify and cut out mindless spending.

Insight: “Awareness is the first step towards financial wisdom.”

This isn’t just about cutting costs; it’s about aligning your spending with what truly matters to you. Recognizing and eliminating forgettable expenses can pave the way for a financially successful 2024 and beyond.

Conclusion: “In the dance of dollars and dreams, being financially aware leads you to a future of well-made choices and cherished memories.”

Source: https://www.entrepreneur.com/money-finance/do-this-exercise-for-healthy-money-habits-in-2024-and-beyond/467139