Habits like watching what you eat and working out regularly ensure that you feel great now and stay healthy long term. Healthy financial habits are just as important. Adopt these best practices for managing your spending and staying out of debt. Practice them until they’re second nature. Your future self will thank you!
1. Track your spending
Understanding where your hard-earned money goes every month is as important as reading food labels and watching your caloric intake. Make it a habit to review your bank statements and credit card statements to see exactly how much you’re spending and where. This will help you understand whether you are living within your means and identify places you can cut back. Many banks and financial apps offer expense tracking features, or you can also use a simple spreadsheet.
2. Trim unnecessary expenses.
Challenge yourself regularly to eliminate one or two non-essential monthly expenses that no longer align with your priorities. For example, you may have noticed how much you saved by not eating out during this lockdown and social distancing period. Once it is safe to eat out again, avoid overspending on dining out. Differentiating between a want and a need may be tricky at first, but once you get the hang of it and see the extra savings, it will become second nature.
3. Have a plan for paying down debt
A certain amount of debt is a healthy part of owning important assets like a home or a car, but you don’t want to fall into unmanageable debt. Stay on top of debt by tracking how much you owe, to whom, and how much interest you are paying on each debt you have. Make a plan to pay off your debts with clear goals and timetables. Be sure to prioritize paying down “expensive” debts like credit cards first.
4. Pay your credit card bill on time and in full every month
In order to build and maintain good credit, pay your balance in full either on or before the due date every month. What happens if you put off your credit card payment? Often, you’ll be hit with late fees, an interest rate increase, and damage to your credit score. This is a steep price to pay, especially when you’re just starting to build a financial foundation - and it’s also unnecessary, given that many banks and credit card companies offer autopay solutions to ensure you always pay on time. If you’re a Jasper customer, you can even choose from unique autopay options that align with your personal credit goals.
5. Build resilience by preparing for the unexpected
The coronavirus pandemic has truly turned the world upside down, and during these uncertain times, it may feel like a lot is out of your control. Fortunately, there are practical steps you can take to feel more in control of your finances.
Build an emergency fund.The coronavirus pandemic has proven the importance of setting aside savings just for emergencies. Long after the pandemic is over, having an emergency fund will empower you to take unexpected expenses in stride, without falling into unmanageable debt. Learn more in our article, Why you need an emergency fund and how to build one.
Turn less than ideal circumstances into an opportunity to save. For example, if there are any areas in your budget that are now freed up due to the pandemic, put that money into savings. If you spend less on gas because you’re working from home, tuck away your monthly gas budget instead of spending it on something else. Even the smallest amount will give you an extra sense of security and confidence.
Consider creative solutions. When the unexpected happens, you may need to look for sources of extra income or find different ways to meet your obligations. Do your homework and don’t be afraid to reach out to your network for ideas and resources. For example, if you’re struggling with student loan payments during the coronavirus outbreak, you might want to explore refinancing or deferring your payments for a bit.
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