Improve your money skills in 8 minutes a day
8 minute read
A healthy lifestyle goes beyond just taking care of your mental, emotional, and physical well-being. It is also important to practice financial self-care — especially if you want to save or pay off debt. Additionally, it can help avoid unwelcome surprises, such as missed due dates or unexpected expenses.
Developing a daily financial self-care routine, however, will help you instill long-term, positive money habits. To get you started, here are some tips for improving your money skills in just 8 minutes a day.
Create a positive mindset when it comes to money
Having a positive mindset about money is the first step. The more you fail to believe that you will be able to improve your financial situation, the more likely it is that you will create your own hardship. Why? Because the thought precedes the action.
Typical negative money language includes:
- “I am always broke.”
- “I don’t have any money.”
- “I’ll never get ahead of my debts”
Instead, flip the script into something more positive, such as:
- “I am not defined by my circumstances.”
- “There are plenty ways to make multiple streams of income.”
- “I am in control of my money.”
It is possible to turn your positive money statements into working principles in your life. Remember, thought precedes action.
The best way to start the day is with a positive money mindset. However, you can also do this whenever negativity creeps in. In order to reach financial wellness, it is a necessary step that takes just a few minutes.
Keep track of your daily spending
There’s no way around this. Tracking your spending is an essential part of organizing your finances. When you know what you spend your money on and how much you spend, you can see exactly where it goes, and where you can save.
You can easily manage your finances on the go thanks to expense tracker apps. Although expense-tracking apps overlap with budgeting apps, the latter focuses more on the details of your expenses. In most cases, these apps categorize your expenses and allow you to get a good idea of how you spend your money.
It doesn’t matter whether you want an expense tracker app that captures all your transaction data easily, an expense tracking app that automates your job expense reporting process, or one that requires you to manually enter each transaction, there are apps out there for everyone.
Mint is considered by many to be the undisputed king of budgeting tools. More than 20 million users have used this popular platform since 2006. All of your financial accounts are linked, including checking, savings and credit cards. The software then analyzes your spending by month, quarter, or year on an automatic basis. You can then see where your money is going by category using Mint’s graphical interface.
If you’re just starting out, though, Goodbudget is worth exploring. And, serious budgeters can’t go wrong with You Need a Budget (YNAB).
Keep an eye on your bank accounts
Monitoring your bank account is an effective way to track your spending and detect fraud. In a Lexington Law poll, 36% of Americans check their bank accounts daily, for context on this money habit.
Generally, it takes less than five minutes to complete this small financial self-care task. Logging in daily allows you to quickly check your balances and scan for new credits or debits.
Pay attention to bill due dates and payments
The easiest way to save time on paying bills? Automate them.
Furthermore, you won’t have to worry about writing checks or missing due dates if you set your bills on autopilot. Try automating certain bills through the company billing you if your bank doesn’t allow you to do so.
For those bills that need to be paid by check or online, you can block off 10 minutes or so per week.
Identify your financial goals and review them
You can develop and maintain good money habits by setting clear financial goals. In order to achieve the above goals, the Consumer Financial Protection Bureau recommends “SMART” financial goals, which are:
Using that framework, you might set the following money goals:
- Over the next six months, save $5,000 for an emergency fund
- Annually investing 15% of your income in a 401(k)
- Getting rid of $10,000 of student loan debt in one year
- Saving $30,000 for a house down payment in the next two years
During your weekly financial self-care routine, you could brainstorm ideas and plan out your financial goals if you haven’t done so already. You can also check on your progress each week if you have already established financial goals.
Review your budget
Strong financial foundations are built on a budget. As reported in the 2023 Debt.com Budgeting Survey, 86% of respondents track their monthly income and expenses. It was 80% in 2021 and 2020. And, it was roughly 70% pre-pandemic in both 2018 and 2019.
You may want to block off 30 minutes of the last week of the month for budgeting. The reason? It will probably take a little longer than logging into your bank account or checking bill due dates. Based on any changes to your income and expenses, review your budget for the current month and plan for the next.
Identify any recurring or irregular expenses you can reduce or eliminate. Consider budgeting extra for your six-month car insurance premiums, for instance.
Automate your savings
You can transfer funds between your checking and savings accounts automatically with almost all banks. A portion of your paycheck can be deposited directly into your savings account if you choose when, how much, and where you want to transfer money.
What’s the advantage of this? You’re less likely to spend the money instead if you don’t have to think about it.
You can also use credit card rewards programs and spare change programs, like Acorns, to save and invest the difference after you round up transactions to the nearest dollar.
Pay only with cash
Commit to spending only cash — if not forever, at least temporarily — if you’re serious about drastically reducing expenses. Using cash forces you to be more frugal than using credit cards, since you have to account for every dollar. Also, it is impossible to live above your income when you use cash.
Again, rather than paying regular bills manually, you can have automatic withdrawals made for essential bills, like mortgages, rent, utilities, and the like. You are limited to spending the remaining cash.
Make a plan to pay off debt
In addition to reducing money-related anxiety, paying off debt can also help you manage your finances more effectively.
To pay off debts and become debt-free, the CFPB recommends two plans:
- Snowball method. Using this method, your smallest balances are paid off first. Despite your debts, you continue to make the minimum payments. Additionally, you pay off the smallest balance with any extra money. Your next-smallest balance is then paid off with the money you have freed up. As a result, debt with a higher interest rate may take longer to repay. You may end up paying more in the long run as a result.
- Debt avalanche method. According to this method, your debts are listed from highest to lowest interest rates, also known as the highest-interest-rate method. First, you pay off the debt with the highest interest rate. When that’s paid off, you can use the extra funds to pay off the next loan. In addition, you continue to make your minimum monthly debt payments.
Commit to financial literacy
It’s okay if you’re overwhelmed by the work ahead when it comes to getting your finances in order. Take small steps first. For instance, you could read one personal finance blog post or one page from a book.
Taking this step toward financial literacy does not seem like much. Nonetheless, learning about money on a daily basis will make you more comfortable with it. Also, by practicing this habit, you learn a little bit about personal finances and also stay focused on your financial goals.
And, hopefully, you’ll eventually be able to dedicate more time to improving your financial literacy. Numerous studies suggest that we should dedicate 15-30 minutes a day to reading. A simple change in lifestyle, such as reading 15 minutes a day, will support your brain health for the rest of your life.
Institute a 24-hour rule for purchases
It is also a good idea to force yourself to delay before buying something so that you avoid spending mindlessly. As such, there is no harm in having a 24-hour rule in place. The 24-hour rule forces you to think before you make a purchase for a day.
The 24-hour rule can be approached in a variety of ways. To apply the rule, you can set a basic threshold of $50 for any purchase over that amount. Alternatively, you can decide to take a full 24-hour period for each $100 spent. For example, if you were thinking about buying a $300 TV, you would wait at least three days before buying it.
In addition to making it more likely you’ll buy what you really want, a 24-hour rule allows you to shop for the lowest price during that time.
Practice good credit habits
Increasing your credit score could also improve your financial situation. After all, your credit scores reflect your creditworthiness. As a result, these scores can have an impact on many areas of your life. All aspects of life are included here, from finding an apartment to applying for a job.
For this reason, building good credit requires the following as part of a personal finance management plan:
- Each and every month make sure your bills are paid on time.
- Make sure you don’t exceed your credit card limits.
- Establish a long credit history.
Also, make sure your credit reports are accurate on a regular basis.
This information is provided by Voya for your education only. Neither Voya nor its representatives offer tax or legal advice. Please consult your tax or legal advisor before making a tax-related investment/insurance decision.
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