As a CPA, I have learned more about people and their personal finances than might be healthy. Over the years I have put together an informal list of what I call “Good Financial Habits” that I would like to share with you.
- Pay Yourself First.
Each payday you should transfer a certain percentage of your paycheck to your savings account. You earned the money; you should keep some of it
- Save your tax refund and any work bonuses.
Although it is tempting to spend your tax refund or a bonus, you should save it in a high-yield savings account so it can accumulate interest and grow.
- Cut back on your home expenses.
There are several ways to cut home spending; a less expensive cable tv package or mobile phone plan, reduce your grocery bill, monitor heating and a/c costs by using blankets or fans instead, bring lunch instead of buying it. If you aren’t sure where to make cuts, create a list of your discretionary spending, including meals out, gourmet coffee, new clothes etc. Small changes can add up to big savings.
- Set a savings goal.
It is helpful to have a number in mind that can be broken down into smaller, more manageable increments. You may want to save enough to cover six months of expenses or you may be saving to buy a new car. Either way, having a number in mind makes it more attainable. You can also sign up to receive emails from your bank with account balances. Which will help you keep track of your spending and saving.
- Turn saving into a game.
If you want some competitive motivation to save money, create a game with your spouse or significant other to see who can save the most each paycheck or month
- Put extra cash or change into a jar.
Instead of letting change accumulate in your purse or your pockets, put it into a jar. It may seem insignificant at first, but you will be surprised by how much you can save. You can call it a “rainy day” fund.
- Make saving a habit.
It may take some time to get into the habit, but setting reminders for yourself to save money can go a long way. Once you make it a habit it will pay off for years to come.