There’s no denying that it can take some work to create good habits, and becoming more disciplined about your finances is no different. Yet smart money habits can add up over time to increase your bank account and help you create a more stable financial life. Consider these five tips that will help you examine how you think about and handle money to improve your financial acumen.
- Practice the principal of mindfulness. Mindfulness is the opposite of carelessness. It’s as simple as paying attention to your spending habits and putting the brakes on impulsive purchases. When you’re intentional with your money, you make rational decisions based on what you can afford and what you need. Strategies to help you be more mindful include creating a monthly budget, making lists before going to the grocery store and holding off on large purchases until you can really afford them.
- Keep tabs on your financial transactions. Be vigilant about every financial transaction, no matter how small. Even though checkout clerks use computerized registers, they can still make mistakes when entering items or making change. Whether you’re at the grocery store or the department store, watch as items are rung up to ensure you’re being charged appropriately. Check your receipts. Count your change. In the case of banking errors, what you don’t know can hurt your bottom line. Check your online bank statements daily to monitor charges and also watch for fraud, which is on the rise.
- Show respect for currency. When you mistreat money, you diminish its value and give yourself permission to abuse it. Whether you’re dealing with dollars or cents, take care of every penny. Don’t wad up your bills or allow change to accumulate on the bottom of your purse. Instead, store it carefully and keep track of what you have. Keep your change in a container and deposit it in the bank each month. You’ll be surprised how quickly it adds up.
- Play your cards right. It used to be that a major credit card was absolutely required for online purchases and travel reservations such as airline tickets, hotel rooms and car rentals. In today’s economy, it’s possible to manage many, if not all of these transactions with a debit card. Credit cards can provide advantages through their reward programs, and disciplined use can help build creditworthiness. Yet many cards come with an annual fee and hefty interest rates when you carry a balance. To limit credit card spending, consider keeping your credit card at home and carry only your debit card in your wallet.
- Look within and remove barriers to financial freedom. If you want to be wise with your money, yet repeatedly make poor financial decisions, you may be unconsciously sabotaging yourself. For the most part, money attitudes arise from a complex mix of upbringing, culture and self-control. To help overcome this, focus on the things you consistently spend too much on. Is it dining out? Shopping for clothes? Taking vacations? Hone in on whatever your “weakness” is and try to change your spending habits in a particular area.
While each of these five tips can help you build your financial muscle, one of the best things you can do for your financial life is to meet regularly with a financial professional. An experienced financial advisor can provide financial coaching, helping you identify specific strategies for saving and investing for your future. Find a qualified professional whom you can trust to discuss all aspects of your financial life. Meet annually or as often as you require to discuss your financial goals and adjust your spending and saving habits to stay on track.
Lindell G. Douglas, CFP®, is a Financial Advisor and Managing Director with Ameriprise Financial Services, Inc. [email protected]