Managing your money effectively is a critical factor for everyday life. Whether you’re looking to build an emergency fund, save for a down payment, or anything in between, financial stability and long–term success are just a couple of the results you can look forward to from cultivating smart spending habits. To help you make the most of your funds, here are some tips to consider following:
Create a Budget
Budgeting is one of, if not the, most important tools when it comes to financial management. Without one, you’ll have difficulty keeping track of where your money is going and assessing what areas you may need to cut spending or redirect funds to.
There are many different types of budgets to consider that can help you develop a financial plan. Check out our Budgeting for the New Year: Setting Yourself Up for Success article for tips on how to craft a budget that will help you achieve your goals this year, and beyond.
Needs > Wants
A new approach to finances has been gaining traction this year: the “no buy rule”. This is a rule you can set for yourself to distinguish between wants and needs while shopping. It can be as simple as not buying new clothes until what you have becomes unwearable (rips, faded, is lost, etc.) or as in–depth as creating an entire “no buy” plan for different spending categories. This can include clothes, electronics, appliances, eating out, and even excursions.
Other things to consider while shopping is whether you can find what you’re looking for in the form of an affordable alternative, and to determine if you really need the item in the first place.
Combat Impulse Buying
Have you ever noticed that when you go to the grocery store with a list, you tend to buy only the items on that list versus going without one and buying additional items? Impulse buying may be one of the major challenges to your budget. Fortunately, this can be combated by creating detailed lists for groceries and other essentials, like toiletries, before you hit the store.
If you’re looking to make a big purchase, try the 48-hour rule; wait two days to make a final decision about a big purchase like a new appliance or piece of furniture. There’s also no problem with spending additional time before your purchase looking for deals so you can get the best price for what you’re looking for.
Don’t Get Carried Away with Your Credit Card
Credit is a great financial tool, in theory. If well maintained, it can help you access loan options and lower interest rates, and can be a helpful reflection of your spending. However, if failed to be managed properly, bad credit can lead to increased debt and a low credit score that could hinder you from things like purchasing a car or a house.
To maintain a positive credit report, ensure you pay off your credit card’s full balance each month so you can avoid interest charges. Also, try to use cards with cash back or rewards points, like our Signature Visa® or Platinum Visa cards, to maximize the benefits of making purchases.
Embrace Financial Literacy
There are tons of free education options when it comes to financial literacy. Consider your credit union or bank as a financial resource.
At Signal, we take care in cultivating our Content Corner, Webinars, and Financial Education pages with helpful content that’s completely free for our members to access. Your local library is also a great place to look for books about financial topics ranging from opening your first bank account to investing in the stock market. Sometimes, your friends and family are also great resources who can speak from experience when it comes to finances.
Review and Readjust When Needed
Budgets are supposed to be adjustable, so make sure you’re reviewing yours regularly and reallocating what’s needed to areas like savings, recurring expenses, and debt repayment.
In addition to your budget, your spending habits can be flexible as well. If you’ve followed your “no buy rule” consistently for four to six months, consider treating yourself to something you’ve been wanting for a while. Just don’t forget to research and find the most affordable option for what you’re looking for. Flexibility allows you to stay on track and account for any circumstances that may pop up unexpectedly.
Smart spending habits allow you to be intentional with your money. Try starting small—no need for immediate dramatic changes—and remain consistent so you can celebrate your money milestones. Take control of your financial journey and start working towards your goals today!
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