5 Money Management Basic Habits For Financial Success
5 Money Management Basic Habits for Financial Success
Having good financial habits allows you to not only take care of your day to day financial needs, but to plan for your future as well.
Habit 1. Track your spending.
If you don't understand what you are spending your money on, how will you know where your money is going? You may find yourself at the end of the month wondering what happened to your hard earned income. So, track your spending, all of it! You can set up a spreadsheet or use an app like Mint that will track it for you. You link it to your accounts and it will do all the hard work for you. Budgeting apps are great for people who frequently use their credit cards to purchase things. You can learn more about creating a budget here.
While we're on the topic of spending, change your spending mindset. Our homes are full of things and stuff. Before you purchase anything ask if it will truly bring you joy? If not, don't buy it.
Habit 2. Automate your bill payments.
Set up online payments for as many of your bills as you can. Paying your bills on time helps you avoid late penalties, which can be very steep. It won't just save you money, but it will save you time too. Late bill payments can result in a lower credit score and black marks on your credit report. Learn what goes into your credit score here.
Habit 3. Manage your debt.
The average American household has $15,000 in credit card debt and pays anywhere from 15 to 29% in interest on that debt. Make sure you're paying more than the minimum payment each month and start to pay down that debt. If you couldn't afford to buy something with cash, then you probably shouldn't be putting it on your credit card.
Read More: How Debt Can Affect Your Mental Health
Aim to be in a position whereby you're able to pay your credit card off completely each month. Once you can do that, you're able to take advantage not only the convenience of a credit card, but the perks like cash back and airline miles that some cards offer too.
If you're struggling with your debt, seek help from a professional. A certified non-profit credit counseling agency like Navicore can help you get back on track to becoming debt free. We offer budget advice, credit counseling, debt management plans and housing counseling.
Read more: How We Can Help: Credit Counseling
Habit 4. Save for Retirement
Importantly, make sure you are contributing to your 401K or retirement fund. Take full advantage of any employer matching available to you – this is essentially ‘free money'. By contributing to your 401K before taxes means you're effectively lowering your taxable income, all while ensuring you have a better financial future.
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Habit 5. Automate your savings
Embrace the premise of “pay yourself first”. Vow to save a certain percentage of your monthly income. Have that money automatically deposited into a separate bank account so it's not easily accessible. Build up an emergency fund, contribute to a 529 College fund, vacation fund, or holiday shopping fund. Make the commitment to yourself and make paying yourself first a priority.
Be mindful of how money flows into and out of your life. Find the patterns of spending, examine your habits to find things you can eliminate and focus on ways to save automatically.
Lori Stratford is the Social Media Strategist at Navicore Solutions. She promotes the reach of Navicore's financial education to the public through social media and blog content.