Follow these 12 helpful tips to better save and budget your money, tackle debt, and build your credit score.
1. Track Your Spending Daily
Do your financial goals always seem out of reach? Tracking your spending may help.
Tracking your spending can help you save more and become more aware of where your money is actually going.
If you want to adopt this habit, don’t get caught up in the mechanics of how to track your budget. You can do it with an app like Wally, keep notes on your phone, or simply just write down all of your spendings.
2. Adopt the 72-Hour Rule
I used to have a bit of a trigger finger when it came to buying things online. With my credit card information stored, I could buy anything I wanted with a quick tap. While most of my impulse purchases were things I thought I needed, when I looked back at my purchases, this wasn’t always the case.
The first time I heard about the 72-hour rule was in a short article in the New York Times written by Certified Financial Planner Carl Richards. In the story, he states that when he wants to buy something, he puts it on a list. If he still wants to buy it 72 hours later, he’s free to do so.
Yet, Richards noticed that by making himself wait, he cut out a lot of unnecessary impulse purchases.
I’ve put this rule into practice in my own life and noticed immediate results. I have fewer packages being delivered and less stuff cluttering up my house. By adopting the 72-hour rule, I’m more confident that I buy things I really need.
3. Automate Your Savings
One well-known secret in the world of personal finance is to pay yourself first. That is, as soon as you’re paid, you put money into savings to fund your future goals.
While this is a great rule, you should combine it with one other tactic to set yourself up for success: automation. Why? Because relying on willpower alone to transfer money to savings isn’t setting yourself up for success. Willpower wanes and if you’re deciding between sending money to savings or joining your best friend on a weekend trip, I’m going to guess that you’ll be packing your bags.
Automating your savings, however, solves the waning willpower issue. And, if you’re a Chime member and you’ve set up direct deposit, you can elect to auto-save 10% of your paycheck each time you’re paid.
4. Learn One New Thing Each Week
When you start learning about personal finance, it can feel like you’re entering a whole new world. The jargon and lingo can often seem confusing.
Yet, millennials really need to level up their financial knowledge. According to a survey, only 24% of millennials had the basic knowledge required to manage their finances.
At the same time, it can be an overwhelming task to learn everything necessary to achieve your financial goals. So, give yourself the more manageable task of learning one new thing each week. Follow your curiosity. One week you might want to learn about a sinking fund. Another week you might want to know exactly what an IRA is.
Learning about financial concepts has never been easier. You can pick up a book, read a quick article online (like you’re doing right now), or listen to a podcast. Make this a part of your weekly routine and each year you’ll learn 52 new things about money.
5. Create a Weekly Check-in
I used to abide by a monthly money check-in. But as life got busier (and money got more complicated), I found myself overwhelmed by the monthly check-in. It was difficult to remember what happened at the beginning of the month — and trying to plan for the next month was overwhelming.
Once I changed to a weekly check-in, things improved. I had fewer transactions to look through and fewer things to plan for.
Creating a weekly check-in can be simple. Choose the same day each week to sit down and look through your spending from the week before. Go through your bank account and credit card statements to make sure there are no errors. Then, take a look at where you plan to spend your money in the upcoming week. Do you have any big bills due? Any events or celebrations during the week?
Your check-in can be that simple and fast.
6. Boost Your Credit Score
A better credit score can have a meaningful impact on your financial future. Your credit score plays a big role in determining the interest rate on your mortgage, car loan, or student loan (and whether you get approved at all). Landlords and employers might also evaluate your credit score.
Keep track of your score and use the following methods to build and maintain your credit score.
- Build a positive payment history — Always make on-time payments on your bills or loans.
- Keep your credit utilization low — Try to keep credit card purchases to a minimum so you don’t go over your utilization ratio.
- Leave old credit card accounts open — Keeping an old account open will help lengthen your credit history and increase your total available credit, which can help your credit utilization and score.
- Pay off any lingering debt — This will help increase your score. If you can’t pay them upfront, you can typically set up a payment plan.
You can also look into secured credit cards to boost your score. Eligible Chime members have access to Chime’s Credit Builder Visa Secured Credit Card to help increase their credit score by an average of 30 points¹.
7. Pay Down Debt
Paying down debt is a big contributor to removing financial stress and anxiety from your life. By keping debt as low as possible, you can increase your savings and work toward a debt-free life.
Try to set aside some money for debt payments each month. If you’re making some extra money, put that money toward your debt repayment. This will help you pay more than the minimum and save you money on interest.
There are many different methods out there to pay off your debt. For example, the snowball method prioritizes paying off your smallest debts first before tackling your larger debts. Find a method that works for you and your budget.
8. Build an Emergency Fund
Having an emergency fund is an important money habit, and one that can save you the headache of scrambling for money when the unforeseen happens. The unexpected can happen at any time — you could suddenly lose your job, get into an accident, or suffer damages due to a natural disaster.
In all of these situations, an emergency fund can help ease the financial pain, allowing you to handle unexpected bills and expenses. Having money on hand can help you avoid additional financial stress and give you the power to deal with the problem head-on.
Once you’ve figured out which emergency fund formula is right for you, start saving some money each month. You decide how much you want to save, remembering the important thing is that you are consistently putting money aside for emergencies.
9. Find Ways to Make Extra Money
If you had the time and motivation to earn extra money, would you do it? The answer should be yes because earning extra money is a great way to fund a vacation, invest in the future, and ease financial worry.
There are plenty of ways to increase your income outside of your usual 9-5. Try earning money online by selling items on Etsy or Ebay. You can rent your apartment out on Airbnb or participate in online focus groups that pay for consumer research. You can also pick up a side hustle like freelance writing or driving for Uber or Lyft. These days, even posting content on social media can earn you some extra dough.
The possibilities for making extra money are endless. Look for what interests you and what works best for your schedule.
10. Practice the 50/30/20 Rule
The 50/30/20 budget rule is a great way to learn how to budget your money. In a nutshell, it’s a spending plan where 50% of your take-home pay goes toward Needs, 30% goes toward Wants, and the remaining 20% goes toward Savings & Debt. By divvying out your spending this way, you are ensuring that your money first goes toward the necessities — like rent, bills, food — before you frivolously use it on other things.
Making positive moves with your finances begins with keeping tabs on where your take-home pay is going, and putting that money into 3 main buckets — needs, wants, and savings or debt payments. The 50/30/20 budget rule is simple, but super impactful.
11. Invest in Your Future
After paying your bills, paying off debt, and building up your savings, if you have some money to spare, investing is a great habit that could help you reach your long-term financial goals. It’s always a good idea to start investing in your retirement. It may seem like a ways away, but you’ll thank yourself later if you start contributing to your future today.
No matter the age you choose to retire, you’re going to need some savings to live off of once you stop working. Here’s a really simple rule to remember about saving for retirement: the sooner you start saving, the better, as you’ll have more time to capitalize on the power of compounding interest. This is the interest you earn on your interest, and it’s a good thing for growing wealth.
Consider opening a high-yield savings account, 401K, IRA, or even investing in the stock market. Each of these will better prepare you for the future.
12. Don’t Compare Yourself to Others
While it might be human nature to compare ourselves to those around us, when it comes to finances and money habits, it’s important you block out all the noise and focus solely on you. Trying to compete with others on a socio-economic level can easily lead you down a road of anxiety, depression, and financial disaster.
Everyone’s financial situation and aspirations are different. In order to develop better money habits, ignore what the “Joneses” are doing and figure out what you need to do for you. With the pressures of social media and society, this can be challenging. However, as soon as you stop comparing yourself to others and focus on your own personal finance, you can begin your journey to a healthier you.
Better Money Habits to Boost Your Financial Confidence is written by Erica Gellerman for www.chime.com