5 easy financial habits every woman should pick up

Know Your Money

“Every woman should know exactly how much money they bring in and how much is going out,” Nelson said.

She recommends spending a few minutes at the end of each day to track your spending.

“Over a short period of time, you can learn what areas you may be spending too much on and make the decision to cut those expenses,” Nelson said.

Create a Budget

Once you see where you’re money is going, it’s time to create a budget.

“Creating a budget does not mean you have to deprive yourself,” Nelson said. “A budget can still include self-care items like mani-pedis, but it’s important to start with the necessities. Target your variable expenses, which change from month to month, such as groceries, dining out, clothing, etc. Your fixed expenses — like your mortgage, insurance, phone or cable bill — do not change every month. Through this process, you may find more discretionary income available.”

Seeing exactly how much income you have left over can help you figure out how to prioritize using these funds towards your financial goals.

“Your newfound extra income can be used to eliminate debt, increase your savings and lead you on the path to financial freedom,” Nelson said.

Pay Yourself First

“Every time you receive income or any other form of payment, pay yourself first,” Nelson said. “It does not matter how big or small. These funds can be allocated to your 401(k), an IRA or just a rainy-day fund for emergencies.”

As a rule of thumb, Nelson recommends having at least six months of expenses in an emergency fund if you are single and at least three months if you are married. If you have a healthy emergency fund and are contributing 10% to 13% toward your retirement, you can put any extra income toward whatever other financial goals you have.

“Perhaps you have your eye on a designer bag or other big-ticket item,” Nelson said. “This nest egg is yours, and every woman should have one, regardless of relationship status.”

Automate Your Savings and Expenses

To make it even easier to pay yourself first, automate the process.

“Set up an automated process to have the amount deducted from your paycheck,” Nelson said. “When a process is automated, it is ‘out of sight, out of mind.’ We are less likely to make the effort to manually move funds to that savings account. When it’s automated, you do not have to think about it or take the time to make the transfer or deposit.”

Nelson also said to automate your expenses.

“When your bills are paid automatically from your bank account, you do not have to waste time manually paying your expenses every month,” she said. “The benefit is that you are paying on time, and you can avoid any late fees. However, it is important to review those charges to know how much you are spending and to ensure that you know every expense.”

Use Cash

Although it’s easy to use a credit card to pay for everything, Nelson said to get into the habit of using cash or debit.

“Building a green cash reserve can eliminate the time you spend tracking your expenses,” she said.

If you don’t use cash for everything, try to at least use it to pay for small, discretionary expenses. Set aside a certain amount of cash to devote to these expenses each month. Once that money runs out, you’re done spending, keeping you on budget.

“Start that envelope system where you deposit cash into different envelopes for those minor unscheduled expenses such as tips, clothing or fast food runs for those nights you do not feel like cooking,” Nelson said.

Because cash doesn’t earn as much interest as money invested elsewhere, it’s important to shop around when deciding where to deposit that cash reserve.

“For the cash that’s in the bank, make sure you are earning the most on it by taking advantage of online banks that pay higher interest rates,” Nelson said.

The post 5 Easy Financial Habits Every Woman Should Pick Up appeared first on GoBankingRates

Original source: GoBankingRates

Comments are closed.