On Monday I talked about 10 bad money habits you should ditch immediately. Today I’m going to do the opposite. I’m going to give the 10 money tips you should live by. Though you should know that some of these things you may already be doing this post is mostly meant to be a list to get you motivated toward building better money habits.
- Pay yourself first. This is such a simple tip but I had to include it. I hear a lot of people say this but are they doing it? Setting money aside before you pay your bills is important. What if that next big issue comes up and you need money now? Also don’t just set some aside for an emergency fund, set some aside for retirement as well.
- Know where your money is going. Knowing where your money is lets you know where those little leaks in your budget are and makes plugging them a lot easier. If you have more month than money this is the first place to start, and this may also make you realize how much money you are spending on stuff I really didn’t need.
- Pay off your credit cards every month. Keeping your credit cards paid off every month does two things for you. First, it will boost your credit score by showing financial institutions that you can handle money and two, it’s a lot easier when you don’t have to make minimum payments every month.
- Pay off your bad debt first. Bad debt is the debt that doesn’t benefit you in any way. For example a bad debt would be credit cards. They have high interest rates and no benefits to holding the debt. A good debt would be your mortgage. Though still being a debt it has special advantages. They have lower interest rates and interest is usually tax deductible giving you more money back at tax time. Though you may want to talk to your CPA for more info on this.
- Have money set aside for emergencies. I covered this a little in tip 1 but I thought it should also be said that you need to have a fund for those times that you need that extra cash. Having an emergency fund helps in many ways but most of all it will help you sleep better at night knowing that you aren’t living paycheck to paycheck.
- Contribute to your retirement plan at work. If you have a full time job that has a 401k or some type of retirement plan this is one of the simplest ways to save. Money coming from your paycheck untouched allows you contribute to your retirement before it gets to your hands. With an out of site out of mine philosophy you will be surprised how the money can add up in a few short years.
- Constantly looking for ways to cut cost. I like to do this a lot. Many times I will look at things I can cut cost on such as Internet, cable TV, telephone and many other things. I’ve found ways to save money on all of these and more and you can too. I will also requote my car insurance and property insurance, and look into refinance options to see if I can save money on my mortgage.
- Understanding your needs and wants. There is always a fine line between what you want and need. Though this really comes down to your habits. If it’s hard for you to go to Walmart and walk out of there without picking up something you didn’t intend to buy there you bought based on wants. If this is tough for you look for support such as your spouse when going to these places and stick to the budget.
- Start saving for retirement early. This tip won’t apply to everyone but if you are a bit younger or know people who are younger this tip applies to you. Saving for retirement early has two advantages. First, it’s much cheaper to fund retirement because you have more time to do it. Second, you also get the compound effect out of you money by doing this. Read this post to learn more about that.
- Review your credit card statements. Reviewing your credit card statements can save you big bucks. I recently was skimming though one of my recent statement and seen I was making a $30 payment to a payment protector program I didn’t even agree to sign up for. Canceling that one program saved me $360 a year. It’s also a good habit to check over other statements you get like your phone bill, insurance bills, cable bills, and whatever else you might have.
Are there any other good money habits you live by? These are a few that I live by, yours might be different but leave comment below and share your stories.