Mark Cuban. Warren Buffett. Michael Bloomberg. Most people will never be as rich as the world’s wealthiest billionaires, but you can still learn from their smart money habits.
From ditching debt to paying bills on time, fiscally savvy folks have developed good habits and plans that keep them in financial shape. And with a little effort, you too can master their tricks for managing money. If you’re looking to break bad money habits and get on more solid financial footing, follow these fiscal tips from the pros.
Last updated: Jan. 20, 2021
Have a Written Budget
Many people have a budget — sort of. They know who they have to pay each month and how much. However, they don’t have anything in writing.
When you have a written budget, you see exactly where your money is going. Best of all, you can direct your money where you want it to go.
Your budget is your roadmap to financial success, so make sure you include every single expense. Don’t forget about that coffee you grab on the way to work or the money you spend on parking every day.
Pay Down Debt
Take the steps necessary to pay off your debts. You will need to create a debt payoff plan to make it happen.
Start by assessing the types of debt you carry and determining what might be paid off first. Your credit card debt should be the first thing you look at. In addition to possibly carrying a high interest rate, it typically has variable rates. Because credit cards are revolving debt, if you only make the minimum payment required each month, you may not be able to pin down an end date for your debt. Consolidating revolving debt into a personal loan lets you lock in a repayment term.
It might take some time, but you can pay off debt if you’re diligent.
Save Money Every Month
This is a good habit some people overlook. Your budget should include a line item for every penny you earn, including savings for emergencies, retirement and holidays. There is never a right or wrong thing to save for.
The best trick that you can use to save is to automate your savings. When money is automatically deducted from your account each month, you can never make excuses about not having money to put aside.
Avoid Immediate Satisfaction
It can be tempting when you are shopping to pick up that new bag or those cute shoes. However, do you need them? Will buying them truly make you happy? Why do you feel you want to buy them?
Asking yourself these questions can help you avoid emotional purchases, which often lead to buyer’s remorse.
Keep the Lines of Communication Open
If you share finances with someone else, have regular budget meetings. Look over your finances, and check your spending. It helps for both people to know where you are financially at all times.
You need communication in all areas of a relationship — including finances. Never hide money or spending from your partner, as these habits lead to anger and fighting.
For best results, make time for at least a monthly meeting and add the event to both your calendars so you don’t forget.
Pause on Using Credit Cards
Using cash is one of the best ways to ensure you are financially fit. Even if you use credit cards in the right way and pay them off every month, you might still be overspending.
For instance, if you have only $100 to spend on groceries, using cash helps you avoid spending $101. However, if you are using a credit card, you may be tempted to spend more than what you anticipated.
Pay Your Bills on Time
Late bill payments are serious budget busters. Fortunately, there are ways to ensure bills are paid on time. Whether you need to set calendar reminders or put bills on autopay, it’s worth doing.
When you pay your bills on time, you show you are responsible and avoid racking up more debt due to late fees that get tacked on.
Live Within Your Means
Many people wish they could live in a bigger house or drive a nicer car. However, that doesn’t mean you have the money to make these kinds of lifestyle changes.
Different incomes necessitate different lifestyles, and living outside your means is a bad habit that can put your entire budget in jeopardy. While one person might make enough to afford that 2,500-square-foot home, another will have to make due with an 800-square-foot apartment — at least for now.
Whatever your salary, the key is not to spend more than you have. If buying a home is not an affordable move for you today, then consider creating a savings plan before purchasing one.
If You Use Credit, Be Smart
Credit cards can be a great way to not only build your credit, but also to get rewards and perks. However, you need to use them the right way.
Never charge more than what you have available in the bank. If you only have $500 in your account, do not spend more than that. The reason is that payday is never a guarantee. Sure, a company owes you money, but if it goes under and can’t afford payroll, where will you get your money from?
You should be able to pay your entire balance in full each month — and on time.
Balance Your Accounts Regularly
While you can use online banking to check your account, you should never rely upon this balance. There might be transactions that have not yet posted, online bill payments that are not reflected and even checks you have written that have not yet cleared. By balancing your account regularly, you know what you actually have to spend.
You don’t have to start out doing all 10 of these successful habits. Find the one or two you know you can master today, and then slowly add in the other eight. Before you know it, you’ll be on the road to financial health.
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