Money Management Habits

Credit cards can be your friend instead of your foe.

Credit cards can be your friend instead of your foe.

Credit cards and automatic payments have simplified the way we manage our money. Paying bills on time and controlling unnecessary spending is easier than ever, and will become a habit once you put it into practice for a little while. Today's the day to start getting your money habits under control.

Use a Credit Card

Credit cards are not evil. They can actually help you manage your money, if you only spend what you can afford and pay bills every month, in full. Your monthly credit card statement gives you an excellent record of your spending habits. It's a useful budgeting tool and comes in handy at tax time, if you need a record. Many cards also offer some nice rewards, like airline miles, hotel nights, or cash back.

Limit the Cash in Your Wallet

Some people have trouble with credit card spending, but others have an equally bad habit of spending too much cash. Keep some cash on hand for emergencies, like the twenty your mom wanted you to stuff inside your shoe -- just not too much. That pack of gum or knickknack at the dollar store won't be nearly as tempting if you have to break a twenty for it.

Automate Your Bills

A habit you don't even think about is an easy one to maintain. There's no need to spend money on stamps when your utility, telecommunication, loans and other monthly payments can be paid automatically by credit card or by electronic funds transfer (EFT) right out of your checking account. A landlord probably won't be prepared to accept EFTs, but you can arrange automatic rent check mailings through your bank. Set them up to pay a few days before the due date, so you don't risk a late payment, and make sure you have enough money in the account to cover upcoming payments.

Set a Time to Pay Bills

Pick one night of the week to pay bills -- maybe the night of your favorite show. When your program comes on, you'll remember that bill time follows immediately. Register automatic payments or deposits into your check log at the same time. The bill paying hour is also a good time for couples to talk about their finances together.

Pay Yourself First

Just like bills can be paid automatically, you can make investments automatic, too. Retirement savings can be taken directly from your paycheck. Other investments can be automatically withdrawn through EFTs. When you automate your investment habit, you'll find it easy to save money regularly, because the cash will not be there to spend on other things.

Pay Attention to Life Altering Events

A new marriage, baby, home or job are times to reevaluate your finances. You probably never had life insurance before, but a new baby means you need to consider getting it. When you take a new job, you'll need to roll over your retirement plan; this is also an opportunity to review your investment choices. If you had a flexible spending account (FSA) you'll need to check the reimbursement timelines, so that you don't leave any money on the table.


About the Author

Annabella Gualdoni has written newsletters and reports for corporations and nonprofits since 1994. She is a real estate professional and also teaches subjects including international cooking and travel, dating/relationships and personal finance. Gualdoni has a Bachelor of Arts in international development from University of California, Berkeley, a Master of Arts in international relations from Boston University, and a Juris Doctor from Boston College Law School.

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