Establishing Good Financial Habits
We all tend to develop ways to provide a rhythm or structure to our daily lives. Some become habits that are hard to break.
The same applies to finances. If you build good habits you gain a sense of control over your money. Here are ten tips to help develop routines that can get you to your financial goals:
1. Make sure your financial information and records are organized. Knowing where important financial information is located and having a system for paying your monthly bills will save time and aggravation.
2. Use direct deposit for your paycheck. This saves time and gets your money working for you faster. It is also safer.
3. Use automated savings plans to save for near-term purchases and long-term financial goals. This involves having your financial institution or your employer transfer a set amount each month into your savings account to be available for a vacation or a major purchase. It also includes participating in your employer's retirement plan to save for the future.
4. Prepare a household spending worksheet. The process of preparing your first one will help you identify potential areas for reducing expenses. Analyzing your spending on a regular basis (perhaps annually) will help you monitor your spending and develop savings habits.
5. Prepare a personal balance sheet periodically. Having a current, or relatively current, personal balance sheet can be handy when you are considering applying for a loan. Over time, you will be able to monitor your progress toward your long-term financial goals.
6. Reconcile your checking account monthly. This avoids bouncing checks and fees that may be charged if your balance is too low. It is much easier to do this every month than to skip a month or two and then have to deal with multiple statements.
7. Review all your bills and statements as soon as you receive them. Even if you are not going to pay the bills immediately when you receive them, by reviewing your bills and statements, you can identify and correct any errors.
8. Make credit card payments promptly and pay more than the minimum. Avoid late payment fees and reduce the amount of interest you may owe on unpaid balances by making sure your payments arrive before the due date. Paying only the minimum will cost you more interest and it will take much longer to pay off the balance.
9. Be sensitive to fees. Some fees cannot be avoided, but choosing to walk an extra block to use an ATM that does not charge a fee instead of using an ATM outside your network can be worth the effort. Also, be sure to understand any fees that may be charged on your checking or savings accounts based on minimum balances or excess transactions. There is no sense in paying fees if you do not have to.
10. Learn more about handling your finances. The more you know, the easier handling your finances will seem. Our Financial Education Centre is designed to help answer questions and provide you with the tools you need to make informed decisions when it comes to your banking and your future. Please peruse our financial basics and product demos to get a better sense of how the financial world works for you. Learn more in our Financial Education Centre here.
Your habit of a morning coffee may be a good start to your day. A few good financial habits can be the start of a good financial life.