What makes people stand out when it comes to having good finance habits? How do you know if you're a good money manager or not? Are you paying their bills on time, avoiding interest charges and overage fees, and keeping their debt to a minimum are just some of their common characteristics.
These people are usually savers, not spenders. Though they may not have millions of dollars in the bank, the money they have is managed effectively and wisely. Check out these 10 healthy financial habits.
10 Financial Habits You Should Start Today to Be The Best Money Manager You Can Be.
1. Have a Budget
Having a budget is the first step in every organized personal finance plan. Think outside of the normal rent, car payment, and insurance when you start listing your expenses.
You need to take into account the hair salon, the weekly Sunday brunch, Netflix costs, and so on. Don’t forget a single $2.50 coffee out! To simplify things in our home we use an umbrella amount of $50 to cover any miscellaneous “fun” spending we do.
2. Never Spend More Than What You Have
With easy access to credit cards it can be tempting to spend more than you have in the bank. I’ll be honest, credit cards have a lot of great advantages! I especially love using cash back bonuses as well.
But to be the best
money manager you could be, if you feel like the allure of shopping will be more than you can resist, cut up those credit cards immediately!
3. Pay Bills on Time
There are so many ways to make sure a bill is never paid late. You can set a recurring reminder on your phone, set up automatic bill pay, or frequently check all of your bills and accounts. I check my account balances often and still insist on receiving e-bills for all of my expenses. I’ll flag each message until I do my routine paying of the bills at the beginning of each month.
I have an easy-to-navigate yet detailed budget spreadsheet that keeps me in line and on top of things. It’s been years since I forgot a payment. Organization and awareness are key to paying your bills on time!
4. Research and Purchase Wisely
You see a new pair of shoes you want to buy while you’re out shopping. Your instinct is to purchase them immediately, right?
Immediate satisfaction in shopping can sometimes be the reason you overpay on something. Take a moment to browse on your smartphone or at home to make sure you’re getting the best price available to you.
I always check Amazon because of our
Prime membership and will usually pay anywhere from 5-20% less than any in-store price. This is especially true for books and clothing. To me, it’s worth saving 20% to wait for the product to be delivered to my home.
5. Involve Everyone
Get everyone in your family involved with keeping to a budget. Sit down together and make a plan that you can all stick to. Work out how much spending money is available and agree between you what you’ll each have.
6. Set a Savings Goal
Some people find it hard to get motivated about saving, but it’s often much easier if you set a goal.
Your first step is to have some emergency savings – money to rely on if you have an emergency.
Try to get three months’ worth of expenses in an easy or instant access account. Don’t worry if you can’t save this straight away, but keep it as a target to aim for.
The best way to save money is to pay some money into a savings account every month.
7. Pay off Debt
Debt is too often a problem whether you’re in your 20’s or beyond. And it will certainly take advantage of you if you’re not paying attention. I cringe when I think of someone having an interest charge on an unpaid credit card balance.
Paying off credit cards and loans should be your number one priority because of the interest they accrue and the effect they can have on your credit score.
8. Invest Your Savings
As your savings start to grow, you can:
- Put more money into your pension. It’s a great way to make sure you’ll be able to live more comfortably later in life.
- Make an investment plan based on your goals and timeframes.
9. Be Flexible
Life is unpredictable so try and review your budget and your spending if there’s a change, or at least every couple of months.
You may get a pay rise, which means you can save more, or you may find your household bills increase.
10. Save for Retirement
“I’ve got time to save so why worry about it?”
So many of our youth think like this but the years we have to save money will, unfortunately, fly by. Start building your retirement accounts
NOW!
Putting it off even five years makes such a difference in the amount you’ll get to live off of in your old age. If your budget is strapped and you can’t set aside large contributions, it’s not the end of the world (though not a prime situation, if I’m being honest). Saving even the smallest amounts every month will eventually add up.
Financial habits can be adopted, you don’t have to be born with them. When I was younger I lived by the mentality, “This is how much I have so this is how much I can spend.” I cared little about retirement or savings until I was in college. The way I handle money now is the extreme opposite of how I was back then…thank goodness!
You may feel like you’ll never be able to replace your bad habits with good ones, but you can! It’s never too late to change the way you manage your money.
Here are some of the best books that I would definitely recommend:
So what is financial planning to you? What financial habits do you have? What is your strongest quality when it comes to handling your money?
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