Are your money habits getting in the way of your financial goals? With a little effort and practice, you can make positive changes and take charge of your money.
Here are a few strategies you can use to ditch bad habits and upgrade to a smarter money management lifestyle.
Habit: I worry about my money, but I don’t keep track of where it goes
Upgrade: Assess your financial routines
Gaining a clear picture of your financial habits is the first step to improving your money management routine. Money Management International (MMI), a nonprofit financial education and credit counseling agency, offers an online calculator where you can add up all of your expenses to help you understand where your money goes every month.
Habit: I avoid finding out my credit score
Upgrade: Check your credit report every year
Good credit is an asset. It can help you obtain loans, lower interest rates and approval for insurance or a housing lease. If you don’t know your score, Credit Sesame will provide you with it for free, and show you how various activities will improve or damage your score. For instance, paying credit card bills on time is one of the best ways to improve your credit scores.
Habit: I want to save more, but I don’t know where I can cut back on my spending
Upgrade: Build a budget today
“What I hear more than anything is that people know they should have a budget, but they haven’t taken the time to make one,” says David Weliver, who blogs full time about money management at MoneyUnder30 from his home in Portland, Maine.
Put your budget in writing and refer to it often. Once you use MMI’s online calculator, much of the work involved in building a budget will be done. Using online banking and money management apps for your mobile phone make tracking your spending easy.
Habit: I sometimes forget to pay my bills on time
Upgrade: Automate as many payments as possible
The easiest way to avoid late payments is to automate them. “If you take about 45 minutes to set up automatic bill pay with your bank as opposed to an automatic debit by the biller, you’ll know that all of your bills are paid on time,” Weliver says. “And you’re more likely to have enough money in your account to cover those bills. I recommend making automatic payments into your 401(k) and short-term savings account too.”
Habit: I make minimum monthly payments on credit card debt
Upgrade: Prioritize debt reduction and reduce the amount you owe
If you’ve accumulated sizable credit card bills, it’s important to get that debt paid off as quickly as possible to prevent the interest from compounding. Here’s one way to do it: Pay off your smallest credit card debt first. Once it’s paid off, take the money you were paying on that debt and add it to the minimum payment on the card with the next highest interest rate.
Once you have a strategy in place, all it takes is a little practice to make your good habits your new money management lifestyle. The best part? Your new habits can give you a sense of freedom from financial worries.
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.