We all have certain habits that we do every day, whether intentional or unintentional.
Habits allow us to do specific daily tasks more effectively and give us a sense of routine. There are five essential financial habits to have. These habits will provide you with the ability to master your finances and remove any fear you may have around money.
Spending money is something we have to do to survive and have fun in life.
There are things we need in life, such as housing and transportation, as well as things we want such as an iced coffee or concert tickets.
Spending money is something that cannot be avoided. To be a mindful spender and guard of your money, you must track your spending. Tracking your spending will give you a greater insight into your spending habits.
You may not realize that you are spending $10 on small purchases every day until you track those purchases.
Start by using an app or writing down each transaction in a notebook. Put the date, cost of the item, and category for the item. At the end of the week, you can start to see a pattern of your spending. You may find that you are spending more than you realized.
Budgeting is an overlooked financial habit because it can be very tedious to do and honestly, a little scary.
A budget forces you to come to terms with your income and spending. If you are tracking your spending then creating a budget can be done very quickly. Creating a monthly budget will allow you to set financial goals for yourself and evaluate your income/spending.
When you create a successful budget, you should have a $0 balance at the end of the month. All of your money has to be accounted for. If you are negative on your monthly budget then you know that you spent too much money and need to cut back or increase your income.
A budget should be easy for you to stick to, especially if you follow these steps to create a budget.
Financial technology has evolved and has given us more insight into our finances.
Most banks have an app that you can download on your phone to check your balance and payment activity. With this technology, you can know the status of all of your accounts within seconds.
Checking your account every day may seem like a large time commitment, but it should only take you a few minutes every day. If you can check TikTok right when you wake up, you can take a few minutes to ensure your accounts are where they should be.
Knowing the balance of your checking or savings account will let know how much money you have left for the month. Checking your credit cards every day will remind you of an upcoming payment or any suspicious activity. This daily habit will give you a lot of information.
Having a good credit score is very important for your current and future self.
Derogatory marks on your credit report could take years to undo. If you've been a victim of identity theft, your credit score could be impacted by this crime. It is a good habit to check your credit report every month to ensure your score is improving and check for any identity theft.
Catching and reporting any activity that was not authorized by you as early as possible will help you keep your good credit score.
Most credit card companies will work with you on suspicious activity, this can still hurt your credit score until the issue is resolved. If you have never checked a credit report, you can check your report and what to do if you see any mistakes with a few simple steps.
Part of being an adult is paying bills.
There is a cadence of when bills are due, usually weekly or monthly. Paying your bills on time is important because a late payment could mean having your utilities cut off or being sent to collections.
One habit to have if you have any bills is to automate as many of your payments as you can. Most utility companies and leasing offices have some sort of auto-payment option that you can set up. You can even set up auto-payments for your loans or credit card bills.
Automating payments gives you more freedom. You won’t have to remind yourself to pay a bill or worry that you missed a payment. The mental energy you were using to pay your bills on time can be used for other important and more fun things in life.
While there are more financial habits to have, these five habits are a great place to start for anyone.
If you work on doing these five things every day, or month, you will start to understand your own financial situation better and know what next steps you need to take to reach your goals.
August 13, 2022
August 10, 2022