How To Get Good With Money In A Year

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How To Get Good With Money In A Year

We live in a world that encourages us to spend wastefully, accumulate more than we need, and put off things like retirement saving until…. we’re basically retired. It’s easy to look around us and see all the things we could be buying to become the person we want to be and spend lots of money in the process. Becoming the person who is good with money is quite easy and straightforward but requires discipline, lots of it.

Here are 9 steps to achieve it.

  1. Create A Budget

Working without a budget, you have no chance of getting control over your money — and getting it to do what you want. Sit down with a few months’ worths of card statements and bills, track exactly what you're doing, and sort everything into a category.

2. Build An Emergency Fund

It’s a recommendation that you have 3 months’ worth of all living costs saved up in an easily accessible, regular savings account. You can do up to six months’ worth, but at least initially, three months is the best balance between “doable” and “providing the necessary security”. This emergency fund (and about $1000 in your checking account for the day-to-day use, once bills are paid) are really the only money you should keep in regular bank accounts.

3. Do a Credit Card Checkup.

Comb through statements and purchases from the last three months, make sure you’re not utilizing more than 30% of your available credit (this impacts your credit score) and raise your limits if you can to grow the gap between “what you can use” and “what you do use” — you want as much unused credit as possible. Determine if the rewards systems (travel, cash back, etc) you have are the most valuable to you and if you’re using them to their fullest extent. Last, set up your bills to be paid on your credit card each month, then set up an automated payment from your checking account to your credit cards to pay them in full each month — this ensures you maximize the rewards you get with the money you were already spending.

4. Automate What You Can

Card payments, bill payments, and savings transfers should all be automatically made from your checking account. This way, you won’t tempt yourself to not save, nor will you take a credit score hit by forgetting to pay something.

5. Know (And Build) Your Credit Score

Use a free online service app to find out what your credit score is — — and many such services will also tell you how to improve it. Check your score at least twice a year.

6. Plan For Retirement

Lay out a basic plan for retirement savings. This may sound daunting, but if your employer offers retirement accounts, you can simply set a meeting with your human resources rep to go over your options. Initially, open at least one retirement account based on your needs. After your emergency fund (three to six months’ worth of living expenses) is set up, your retirement fund is the first place you’re allocating savings.

7. Run A Career Checkup

Compare your salary against others in your field. Ask yourself questions about your job fulfillment and performance. Are you happy? Are you working toward something specific? Do you see areas to grow in your current job and at your current place of employment? Set goals for one, five, and ten years down the road in your professional life, and write them down.

8. Add At Least One Source Of Extra Income

There are endless side jobs and gigs out there to supplement income, bolster savings, hone new skills, or even make a career transition. Even if you just dedicate a few hours a month to a side job, even one additional stream of income has a huge impact. Whether you are babysitting or tutoring English, or doing an online business, have at least one side hustle on the burner.

9. Treat Yourself

Set mini-goals for yourself across a number of areas (think things like savings, career growth, or personal development), and reward yourself when you hit them. Whether it’s a well-earned massage, cocktail, vacation, or fancy dinner, take time for sensible self-care and treat yourself to the milestones you’ve hit. It will make doing he right thing for yourself most of the time feel manageable and even enjoyable.

I bet that taking the time to think through these steps will set you up with the right skill (and develop that delayed gratification muscle) to make a life for a Future You a whole lot easier.

That’s all for now, my friends. See you all in my next article.

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