Smart Money Habits for Everyone

No matter what money decisions you make on a daily basis, they are either helping you work towards your goals or taking you away from them. Most money decisions we make on a daily basis are actually habits instead of conscious decisions. This is not a good course of action if you have areas you want to improve your finances. 

From the banks we use to the insurance we buy to where we eat for lunch every day, our money depends on the choices we make. If you are trying to save money, get out of debt, or work towards another financial goal, then you cannot rely on the habits you have developed to lead you there on their own. You need to start developing the kind of habits that will guide you to your desired destination.

Save More Money

Unless you have several months’ worth of expenses saved away, then you should be saving more money. Having money in a savings account helps you to stay out of debt by giving you finances when you need them the most. Unexpected financial hardships like a medical expense, car repair, or loss of a job can leave you feeling panic if you have not prepared. 

Giving yourself peace of mind is as easy as putting money into a savings account each month. You can choose a set amount to transfer to your savings account each paycheck, but it might be better to decide on a percentage of your income to save, especially if your income fluctuates. 

If you are new to saving money, then just start with 1% at first. Eventually, it would be ideal for saving 10-15% of your income, but this is not feasible for everyone. Even if it is a possibility for you, it is important to start small and build up while you establish these good habits. You can even set up automatic transfers to your savings account each month, so you don’t forget.

Choose Accounts Wisely

You also need to take care of when you choose a bank and credit card company. You want to store your money with a bank that aligns itself with the goals you are working towards. Unnecessary fees are going to work against your goals. You want to make sure that they have the features that are going to support the goals you have and make your life easier.

You also want to choose a credit card company that will help you reach your goals as well. Rewards programs are great, but only if you are earning rewards for the things you already buy. And the rewards you earn will have to be beneficial to your lifestyle. You should also not trade a good rewards program for higher interest rates because it won’t be worth it. 

You also only want to put expenses on a credit card that you can pay off the same month. Building good credit is important, so having a credit card is a good idea, but only if you are not going to be drowning in debt. If you have had bad experiences with credit cards in the past, then only use them for fixed expenses and never use them for other shopping.

Remember Bills That Are Not Paid Monthly

When creating a budget to help you keep track of your finances, you should remember to factor in the bills that do not occur every month. Property taxes, income taxes, oil changes, car maintenance, and other expenses can throw you off your goals if you are not planning for them. You should also factor in gifts for holidays, birthday parties, school supplies, and family vacations. These purchases will take some of your income, so you need to factor them into the budget. 

Writing them all down and then dividing them up by month, so you know how much to save each month to pay them will help you to stay ahead. If you don’t factor them into your budget, then you are always going to be wondering where your money is going.

Automation

Automating all your expenses can help you make more deliberate and consistent financial choices. You won’t have to worry about late fees for bills, because your bank will pay them automatically when they are due. The things that you cannot automate, you should use cash to pay for instead. Taking out the budgeted amount of money for groceries when you go shopping will motivate you to stay within a budget more than using a card will.