Tuesday, August 14th is National Financial Awareness Day, so there’s no better time than now to learn more about financial responsibility. While taking charge of your finances may sound complicated or challenging, it doesn’t have to be.
Anyone can be financially responsible regardless of income level, household size, or circumstances. That’s because being financially responsible doesn’t involve doing one big thing. It’s more about developing small habits that will pay off in the long run to help you have a brighter, more stable future.
5 Small Habits to Improve Financial Responsibility
There’s a lot of advice available on how to improve your financial situation. Here are five of our favorite habits that can help you improve your financial responsibility. If you put them into practice on a regular basis, they can have a large impact.
1.) Pay Yourself First
Many financial experts say that this one habit is the key to developing wealth. Basically, you set aside money from each paycheck into a savings account or investment or retirement fund. This is regardless of how much money you make or how little you feel is left over after paying for necessities. That’s why you pay yourself first before paying anyone else. Even setting aside small amounts like $10 to $20 per paycheck can really add up over time, especially when you place money in an account where you earn interest. Automate the savings by having the money automatically transferred into savings each month, and you don’t even have to think about it.
2.) Wait 15 Minutes
Have you ever gone to the grocery store to get one thing and came home with a whole bag full of stuff? According to research, much of our spending is done on impulse. We see something that attracts us, we immediately want it, we grab it and throw it in the cart without stopping to think about what we’re doing. To tame such impulses, try waiting 15 minutes before picking up an item you want. You may be surprised to find that after waiting, the urgency to buy the item has passed and you’ll decide that you don’t really need it after all.
3.) Pay Bills on Time
This may seem like common sense, but if you’re like most of us, you’ve set aside a bill because the due date seemed far off and then forgotten about it. The problem with missing due dates, of course, is that late fees and additional interest charges can really add up. It’s a good practice to pay bills as soon as they come in if at all possible. If this just isn’t realistic for you, then immediately record the bill due date on an inexpensive calendar, and place the bill in a specific place. Then check the calendar weekly. Digital calendars on your phone with automated push notifications also work well. By staying organized, you can make payments on time and don’t incur unnecessary late fees.
4.) Use Credit Wisely
While we all know it’s tempting to reach for a plastic card when making a purchase, whether it’s a hamburger at a fast food restaurant or an expensive online purchase, credit card debt can add up fast. According to some financial experts, you should never purchase anything on a credit card that will take longer than three months to pay off. The exception is when a card offers zero percent financing for a set period of time. Then you should make sure you can pay off the entire balance before the end of that period. In the event of emergencies, try to use money you’ve saved rather than incur debt.
5.) Track Your Spending
While that delicious $4 latte that you buy on weekdays on your way to work each morning may seem like a minor expense, it can be eye opening to see how much this small indulgence costs you over time. It amounts to $80 per month and $960 per year. That’s why it’s a good idea to actually take a look at where your money goes. Then you can make small changes in your daily habits to cut expenses. For example, take coffee from home to work three days per week and buy your favorite latte two days. Just this one small change would save you more than $700 annually. If you need easy tools to help you track your spending and make better spending choices, there are many apps available now for your smartphone, such as You Need a Budget, Mint, and Wally. There are even helpful apps like Acorns and Stash that help you set aside your spare change without a lot of effort.
Good Luck on Your Journey to Financial Responsibility!
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