There’s no doubt being disciplined with your money can keep you out of financial trouble, reduce stress and give you more personal freedom down the road. Setting up good money management systems and delaying gratification isn’t easy. But if you set some financial boundaries now, the long-term payoff can be huge.
Try using these 7 rules to take control of your finances, get organized and achieve more with your money this year.
1. Monitor your cash flow
If you’re struggling financially or just want to accomplish more financially, it’s time to watch your spending more carefully. Most financial programs, such as Mint and Quicken, aggregate your financial transactions from linked accounts, organize them by category, and allow you to create and track a budget.
No matter if you prefer using one of these budgeting apps, an Excel spreadsheet, or just a paper notebook to log income and expenses, find a system that works for you. Remember, you can’t change what you don’t measure.
2. Automate your savings
It’s easy to fall into bad habits and lose sight of your financial dreams. To make sure you don’t sabotage your success, set up automated systems to do the heavy lifting for you.
- Use direct deposit to split a portion of your paycheck into a savings account to build emergency funds or save for short-term goals, such as a vacation or a down payment for a home.
- Contribute to a workplace retirement plan, such as a 401(k) or 403(b). These accounts work well because contributions get deducted from your paycheck before you’re paid.
- Set up recurring transfers from your checking account to other accounts, such as a bank savings, Individual Retirement Account or a college savings plan. The earlier you make a habit of saving and investing, the more financial security you and your family will have.
3. Automate your bill payments
Making payments on time is crucial for building credit, keeping late fees at bay and reducing stress. Most banks and credit unions offer a free bill pay service. It centralizes your bills in one place so you see where your money is going and can make sure you can cover future payments.
Your bill payments are sent electronically or by a paper check, so you can pay any company or individual with a mailing address. Most banking institutions guarantee your payments will arrive on time and reimburse any late fees if they don’t.
4. Never shop for entertainment
Don’t go to the mall or click around your favorite online stores unless you really need something. It’s just too tempting, and you’re likely to find something terrific on sale you suddenly can’t live without.
When you have time to relax, spend it on low-cost activities that won’t hurt your finances. Have friends over to cook dinner, take a walk, read a book or play card games.
5. Wait before spending
Overspending is a common barrier to achieving your financial dreams. The more you give in to unplanned or excessive purchases, the more harmful they can be to your financial life.
Instead of caving to impulses, create a rule that before buying anything over a certain amount, such as $50 or $100, you’ll give yourself at least 24 hours to think about it. Oftentimes, you’ll find you don’t want to buy an item after you’ve “slept on it.”
6. Try a spending freeze
Another money rule that can challenge your spending habits is to complete a 30-day spending freeze at least once a year. This is a set period of time when you only purchase necessities, such as groceries, housing, utilities, insurance, medical needs and transportation.
Resisting the temptation to treat yourself shines a light on how often you make impulse purchases you can do without, even if you can afford them. Ideally, the money you don’t spend on extras should be used to build up your emergency fund or retirement savings.
7. Always pay off credit cards
Another important money rule is to never carry a card balance from month to month. Depending on how long it takes you to pay off, the additional interest can double or triple the original cost of an item charged on a card.
If you can’t pay off your entire card balance, make a rule you’ll always pay more than the minimum. Getting your balance down to at least 20% of your card’s available credit limit has an added benefit of boosting your credit.
No matter how much (or little) you earn, using these simple money rules can give you more financial success. Write them down and keep them in strategic places, such as your wallet, computer desktop or bathroom mirror so you have daily reminders to take control of your finances.