Have you ever found yourself putting off something that you know that you “should” do? And when you finally get around to finishing that task, you find that it actually only took a few minutes. And then wondered why you put it off for so long? That can be the case with some of these fantastic financial habits.
These smart habits are ones that everyone knows they should do, don’t take very long to set up, and yet so many people avoid them. Here we’ll take a look at five fantastic financial habits and hopefully encourage you to make sure you get them done.
An Automatic Savings Rule
One of the best things that you can do to make sure your finances are in good shape is to pay yourself first. The first step is to make a budget, detailing all of your income and expenses for a certain time period (usually per month). Hopefully you have more income than expenses, and the money that is left over is what you can use to start saving or paying down your debt.
What paying yourself first means is that instead of taking whatever is left over at the end of the month and putting it into your savings account, you pay yourself at the beginning of the month. When you save at the end of the month, somehow you never seem to have any money left over. The best way to save is to set up an automatic savings rule each month. Find a high-yield savings account and create a recurring transfer from your checking account each month. It’s important that you have a separate savings account. This makes it harder to take money out unless it’s a true emergency.
Another great financial habit to set up is recurring investments. Trying to time the stock market is a common newbie mistake — a much better idea is to set up a recurring transfer from your checking account. This is called dollar-cost averaging and is a great way to minimize the risk of happening to invest all of your money at a high point for the market. Again, just like with setting up a separate savings account, setting up an investment account. This is separate from the account that you use for your monthly expenses is a great habit to start.
Automatic Bill Pay
Setting up your bills to be paid automatically is another great financial habit that you can do in only a few minutes. This is important for two reasons — the first is that late fees and interest on missed payments can have an outsized impact on your budget. Avoiding those fees and interest is very important. The second reason is that it frees you up to do other things with your life. Putting your finances on autopilot is a great financial habit to have.
Before setting up automatic bill pay, you do want to make sure that you have sufficient money in your account. Having a small amount of extra money in your checking account as well as an emergency fund can keep you from over-drafting your account (and getting hit with more fees). Account alerts can be a great way to make sure you aren’t charged any unnecessary fees.
There are many different kinds of account alerts. You should set them up on all of your bank, credit card and other financial accounts. You can get alerts if your balance drops before a certain level. Alerts are available when your statement is due, when a payment is received or if your account has any suspicious activity. You can also choose whether you want to be alerted by email, phone or text message. Configure your account alerts in the way that is most productive for you.
Getting the Mint App
One thing that can help you keep track of all of your finances is the Mint app. Available on the Google Play store and Apple App Store, another great financial habit downloading the Mint app. Get in the habit of reviewing the Mint app a couple of times a week.
You can use the Mint app to review all of your different financial accounts in one place. You can also categorize your monthly spending and see how it is stacking up to your budget. Ignoring your finances is the first step towards a potential financial hardship.
The Bottom Line
If you’ve been putting off some of these financial habits, now is the time to put them into place. As the ancient proverb says — the best time to plant a tree was 20 years ago; the second best time is today. Don’t let any more time go by without making sure your finances are in tip-top shape.