Five steps towards good money practices

Becoming good at managing your money isn’t something that comes naturally. We learn by observing and asking others and by making mistakes that we don’t forget. The good news is that becoming adept at handling your personal finances starts with following some basic money tips and sticking to them.

Here are some good money practices that will help keep your finances in order.

Set a savings goal for yourself

Determine what your savings goals are, how much money it will take to reach them and how long it will take to save. Big ticket items come to mind, such as a new car, the down payment for a new home, college education, retirement and travel. You’re well on your way once you’ve set a financial goal and have planned out how to get there.

Always pay yourself first

A great way to save is to always pay yourself first each payday. Many people do this by having automatic deductions from their paycheck sent directly into their savings account or mutual fund. This is the best way to save money because you don’t have to do anything more to save.

Pay off credit card debt quickly

Whenever possible, pay down or pay off your credit card debt to avoid paying recurring interest on your credit card balance. Again, automatic deductions or the use of an automated bill payment system can help you manage this debt and put you in control of your bills.

Create an emergency fund

Financial planners recommend having an emergency fund that can pay for between three and six months’ worth of expenses. This money will help you maintain your household if you experience a loss of income or if you need money to pay for urgent, unexpected expenses.

Consider buying insurance

It may be wise to consider buying life insurance if someone is dependent on your income, such as a spouse and/or children. If your absence creates a financial hardship, a life insurance policy will help your beneficiaries cope during this period of transition. Other types of insurance, including long-term disability coverage, may also be beneficial depending on your circumstances. Be sure to shop around no matter what type of insurance you’re looking for.

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