Been meaning to get a better hold on your money? Follow these steps to go from freewheeling to fiscally savvy
Looking to make some money changes? Here are some smart moves that can help you get a better hold on your finances.
Create (and maintain) a budget
Start off by tracking your spending for one month. Write down fixed costs such as mortgage and car payments. Keep tabs on small purchases (like movie tickets) with a debit card, and save receipts for cash-bought items. Once you understand your expenses, look at whether they align with your goals. If you can, try to cut back on some nonessential costs and redirect the funds toward your savings goals.
Fast fix: Start using a free website or mobile app that syncs with your accounts to automatically track your spending.
Watch out: Don’t forget to save for one-time expenses, such as home and car maintenance.
Automate your bills
When life gets hectic, it’s easy to accidentally skip a credit card payment. But a creditor doesn’t care about your busy schedule. In addition to incurring a hefty penalty, a late payment can negatively impact your credit report—in the US, your payment history makes up 35% of your credit score. Improve it by automating as many bills as possible.
Fast fix: Use the auto-pay feature on your bank’s website to manage bills that are the same each month. For amounts that vary (like utilities), set them up to be debited from your checking account.
Watch out: If your checking account often has a low balance, it’s better to pay bills yourself, as doing it automatically may cause you to overdraw. Sign up for due date reminders to be sent via email or text, or set a recurring reminder on your calendar.
Decrease credit card debt
First, identify and trim nonessential expenses, and then put that extra cash toward your credit card balances. You can also call lenders and request a lower interest rate. Remember, lowering your debt is one of the best ways to improve that credit score.
Fast fix: Use cash or your debit card for everyday purchases. Keep only one credit card in your wallet for emergencies.
Watch out: People often mistakenly pay off the card with the highest balance first. But it’s actually better to choose the one with the steepest interest rate.
Start an emergency fund
A rainy-day account provides security in case of unexpected financial hardship, such as job loss or large medical bills. Try to set aside enough to cover 3-6 months of expenses.
Fast fix: Open a separate bank account for emergencies. Set up a recurring contribution (even if it’s a small amount) so you automatically put money into it each month.
Watch out: Don’t skip an emergency fund just because you can’t set aside 3-6 months’ worth of expenses right now. Start with a small amount and try to contribute whatever you can on a recurring basis.
When you find yourself with extra funds, try this: put one-third into an emergency fund, one-third toward debts, and one-third toward your retirement savings.
© Meredith Corporation. All rights reserved. Used with permission.
Rate this post!
We are sorry that this post was not useful for you!
Let us improve this post!
Thanks for your feedback!