In a world where buying items online only takes a few seconds and a few days to arrive at your front doorstep, some people may find it hard to stop themselves from spending. 2021 is finally here and, many of us are trying to accomplish our resolutions, including money management. One of the biggest lessons I learned during 2020 was that unexpected things always happen and it’s best to have some extra money to spare. The pandemic caused many people worldwide to struggle with paying for bills and essentials when unemployment rates suddenly reached an all-time high. So, in the spirit of no longer neglecting our finances and taking a step forward “real” adulting, here is a list of financially healthy habits to adopt for the new year.
1. Track your spending
Learning how to track my spending has been one of the best habits I’ve adopted a few years ago and have been sticking to every year since. For beginners, knowing how to start tracking income and expenses can be intimidating. There are many free apps available that help track spending for you when you link a credit card. These apps are also great because they categorize your expenses so you’re aware of what you spend most on and can make a mental note to be more cautious for the next month. Most apps include the main categories like groceries, gas, clothing or entertainment. You can also add more specific categories including gifts or insurance. If you’re not a fan of tracking your spending information online, you can always stick to the classic pen and paper combo.
2. Create a budget
Creating a budget goes hand in hand with tracking your spending. Once you know how much you’re willing to spend in each category, managing your money becomes a lot easier. Of course, you must learn how to create a budget first. First, figure out the estimated amount of income that comes in per month. Then, set a limit according to the amount of money coming in, so you don’t create a budget that’s higher than the amount of money you have to use. Living paycheck by paycheck can cause a lot of financial stress. No one wants that!
3. Stick to a routine
Like with any other aspect of life you try to improve, finding and sticking to a routine is essential for actions becoming habits in the future. Sticking to a routine also means, if one month you have a higher paycheck value, don’t spend it! If you can live comfortably with whatever amount you did last month, then put the extra money into your savings account. It’s always a good idea to have extra income at your disposal in case of emergencies. If you’re able to, I recommend setting aside a specific amount or percentage of every paycheck to put in your savings account. This money will eventually accumulate over time and, you’ll be able to have some reassurance of having extra to use when you need to.
4. Pay your bills ahead of time
Don’t fall victim to interest! Almost all things involving money have interest involved, and most of the time, we don’t even realize it before it’s too late. To start, schedule to pay your credit card bills in advance and in full. Especially if you’re like me and have a handful of different credit cards, it’s hard to keep track of when each bill is due. One life-saving habit I’ve picked up is to set up automatic online payments through your bank accounts. This way, you don’t have to be consciously aware of when bills are due because it will automatically pay from your account. I can’t stress enough to pay your bills on time and in full if you’re able to! Try your best not to accumulate any credit card interest and debt.
Remember, it’s okay to have slip-ups during the journey to building healthy money management habits. Especially if this is your first time budgeting and trying to save money, don’t be too hard on yourself because bad habits are always hard to break. I know firsthand what it’s like to spend time waiting in line to get a Starbucks coffee when I could’ve spent the time making one at home (but it’s not the same, is it!). I hope these few tips will help you improve your spending habits and save money!