Either you drop them, or they’ll drop you.
Everyone has a different version of what I like to call a “financial awakening.” It’s sort of like the next step up from learning the value of a dollar; it’s learning the value of a dollar relative to your own safety, health, and happiness. For some folks, it’s an awakening to responsibility and sensible spending. For others, eh, not so much. If you’re of the latter category, then I’m sure you exhibit one of the following money habits. Better get to dropping them before you end up living in a box.
No Savings Account
Get a savings account already. I know, I know, it’s nice to have one checking account to keep all your money in to do what you want with, but it’s just sitting there, doing nothing for you. A high-yield savings account will pay back what you’ve put into it over the years, and it’s not like money you put in there is gone forever. The entire point of a savings account is to accrue money for a nest egg or emergency. Granted, most institutions will charge you a fee to withdraw from savings, but that’s why you keep your checking account open in addition to it. Just throw a little in there on a regular basis and let it grow in the background of your life. You may be pleasantly surprised when you check in on it in a few years.
Surprise Seasonal Expenses
Different seasons call for different expenses: air conditioning and pool maintenance in the summer, heating and snow tires in the winter, not to mention holiday gifts and vacations. There’s no such thing as a one-size-fits-all budget; as time marches on and the seasons change, you’ll need to adjust your expectations on the fly. Unless you’re the kind of person who doesn’t take vacations and doesn’t do birthday presents (not disparaging you if you are, just saying), you need to keep your finances in a semi-fluid state. When one season ends, look over your expenses and figure out what you can lay off of for a while, and whether that alone will get you what you need for what’s to come.
Minimal Credit Card Payments
It can be very tempting to just pay the minimum payment on your credit card bill every month. Why spend more money when you can spend less money, right? Well, let me tell you, everyone’s number always comes up. If you think you can max out a credit card and not have to pay it back, you’re sadly mistaken. Rather than paying the minimum and waiting for the bank’s inevitable wrath, try to always pay your credit card bills in full every month. That way, you won’t have to pay any interest, and as an added bonus, your credit score will improve.
It’s great when your place of work matches your 401(k) contribution; it’s a sign of good faith in employees and a benefit for all parties involved. But if you want that benefit, you’ve got to put the effort in too. If your job offers a 3% contribution, you’d better put 3% in yourself. If you offer a minimal contribution to your 401(k), your job will offer just as little. If you want to get the best working relationship (and savings), you need to meet them halfway and put in your fair share.
Budgeting can be a little scary the first time you do it. Most folks don’t think much about their daily expenditures, so the prospect of looking over an itemized list of them sounds about as fun as a poke in the eye. Unfortunately, you’re gonna have to take that poke in the eye if you want good financial health. A budget helps to keep your finances in check and helps you to know that you’re only spending what’s reasonable. If you don’t keep budgets, you may find yourself lacking money for the things that actually matter. What are you going to do when you blow your entire month’s rent on Alf pogs? ‘Cause you sure won’t be having a home, I’ll tell you that for free.