Money Management 101 for Single Parents Going it Alone

1. Determine What You Owe

As the head of the household, it’s up to you to make sure that your entire family’s needs are being met. In order to do that, you need to be extremely diligent when it comes to money management basics. This is not something that will happen by accident. Instead, you must plan for it and work toward it.

The first step is to set up your “office.” Gather all of your bills, a calculator, a pencil, and your checkbook.

I would also recommend that you grab an old binder that you can use to keep track of your financial data and a shoebox for storing paid bills.

Now you’re ready to begin:

• Go through all of your bills, and pay anything that is due within the next week.
• If you have bills coming due that you cannot pay, notify the company and ask them to set up a payment plan with you.
• Print a copy of the chart “Paying Down My Debts” or make your own.
• On the chart, list all of your debts, including any car loans, student loans, and credit card debt.
• In addition, list the total balance left to be paid on all of these debts, and the percentage rate you are paying.
• For now, leave the fourth column of the chart blank, and store it in your “Financial Data” binder.

  

2. Eliminate Joint Debt

Before we create a plan for paying down your debt, it’s important to consider some special circumstances that may apply to you as a single parent. I asked LaToya Irby, Credit/Debt Management Expert, to share her expertise on handling joint debt:

Wolf: Let’s say a single mom still shares a credit card with her ex. What should she do?

Irby: Ideally, she would want her ex to transfer his portion of any joint balances onto his own credit card. That way, everyone is paying for their own debt.

Wolf: What about leaving both names on the account, and agreeing to pay part of the amount due? Is that ever advisable?

Irby: No. If you’ve made an agreement with your ex to split the debt payments on accounts that include your name, and your ex-misses a payment, it’s going to hurt your credit. If the ex-fails to pay altogether, the creditors and collectors will come after you. Not even a divorce decree can change the terms of a joint credit card agreement. In the credit card issuer’s eyes, you’re just as much responsible for post-divorce accounts as before.

Wolf: What about situations when a couple’s divorce decree mandates that one individual must pay off the joint credit card debt, but that person fails to do it?

Irby: You can always file contempt of court papers against him/her, but in the meantime, your credit score suffers. So I suggest paying off the debt to save your credit. If you can’t afford to pay the debt, at least make minimum payments to keep a positive payment history on your credit report.

Wolf: What about other accounts, such as utilities and cell phones?

Irby: The safest thing to do, if you have a service in your ex’s name, is to turn off the account and reestablish service in your name.

 

3. Find Money to Pay Down Debt

Another thing we have to do before creating a plan to pay down your existing debt is to find money in your budget each month. To assist in this step, I contacted Erin Huffstetler, Frugal Living Expert.

Wolf: How much money do you think the average person can uncover just by being more intentional about spending and budgeting?

Huffstetler: The average person could easily uncover an extra $250 a month—and probably much more.

Wolf: What are the top 5 areas that you think people should look to first when they’re trying to cut their expenses?

Huffstetler:

• Food spending (both groceries and eating out)
• TV-related expenses (cable/satellite services, certainly; but also movie subscriptions and rentals)
• Phone services (particularly extras like call waiting, caller id, long distance, and cell phones)
• Insurance premiums
• Miscellaneous spending (all those small amounts spent on coffee, vending machine snacks, and other indulgences)

Wolf: How can single parents, specifically, stretch their child support dollars and reduce child-related expenses?

Huffstetler: For single parents looking to stretch their child support dollars, creativity is the key. Look to children’s consignment shops and thrift stores to buy your kids’ clothes instead of department stores; sign them up for Parks and Rec-run activities instead of privately-run activities (which will always cost more); and don’t feel like you have to make up for being a single parent by buying them extra things—it’s you they need, not stuff.

 

4. Pay Off Your Debt

The next step is creating a schedule for paying down your debt:

1. Pay off the debts that charge you the highest interest first.Bob Hammond, author of Life Without Debt, recommends that you pay off the debts that are charging you the highest interest first since borrowing from those creditors is costing you the most money. “Concentrate on paying off the high-cost debts as soon as possible,” Hammond advises. LaToya Irby, Credit/Debt Management Expert, agrees. “Highest interest rate debts cost the most money, especially when those debts have high balances. So you’ll save money on interest charges when you pay off those high-interest rate debts first.”However, there are exceptions to this general rule. Irby notes, “If you’re likely to get discouraged because it’s taking a long time to pay off that high-interest rate debt, you can start with the lowest balance debt. Getting some small debts paid off will motivate you to keep going.”
2. Pay more than the minimum payment. Aim for paying more than the suggested minimum payment, in order to pay off your debts as quickly as possible.Miriam Caldwell, Money in Your 20’s Expert, shares this advice:
   • Choose one debt to focus on.
   • Increase your payment on that debt by as much as you can.
   • Once you have paid off that debt, move all that you are paying on it to the next debt you want to pay off.
   • You’ll be surprised at how quickly you can get out of debt with this plan!
3. Meanwhile, continue to pay the minimum balance due on all of your other debts.Record what you intend to pay toward each debt on the debt chart you made in Step 1.

 

5. Budget Your Monthly Expenses

Now that you know where you stand financially, and you’ve created a plan for paying down your debts, it’s time to make sure that you’re making any other necessary adjustments so that you can keep up with your plan. And this means creating a budget.

I know this can be intimidating, but I’m going to make a suggestion for you: Sign up for Mint.com. It’s a free financial software program available on the Internet, and it will basically do your budgeting for you. It will create a visual pie chart showing how much you’re spending each month on housing, gas, food, entertainment, and more. This way, if it turns out that you’re spending a lot more on food than you really should, you can begin to make the necessary adjustments to get your spending under control.

If you would prefer to create your budget the traditional way, allotting a certain amount of money to each spending category, I’ve created an online budget calculator you can use, which includes categories for child support and other details specific to your life as a single parent.

Finally, in taking a look at where your money really goes each month, it’s important to know approximately how much money you “should” be spending in each category. Generally speaking, your net spendable income (after taxes) should be allocated as follows^*:

• Housing: 30%
• Food: 12%
• Auto: 14%
• Insurance: 5%
• Debt: 5%
• Entertainment: 7%
• Clothing: 6%
• Savings: 5%
• Medical/Dental: 4%
• Miscellaneous: 7%
• Child Care: 5%
• Investments: 5%

 

6. Set Financial Goals

Now that you’ve worked out a plan to pay down your debt, and you’ve created a budget, it’s time to determine your needs moving forward.

Specifically, as a single parent, you need to ask yourself some questions, such as:

• Do you need to file for child support?
• Do you need to get a higher-paying job?
• Is it time to think about going back to school?
• Do you need to consider moving into a home/rental that would reduce your overall monthly payments?
• Are there alternatives, such as taking on another job or splitting expenses with another single parent family, that you need to consider at this point?

One of the things that I want you to know is that the ball is in your court. You determine where this goes from here on out. But unfortunately, you can’t do that if you’re ignoring your financial health, right?

So the fact that you’ve come this far in the process of getting a handle on your finances tells me that you’re determined to make the changes you need to make in order to provide for your family’s future.

So go ahead and ask yourself these questions. So much of single parenting is learning to roll with the punches and be creative in the face of adversity. If, indeed, you need to make some pretty major changes, now is the time to do it. Don’t incur any more debt where you are. Be resourceful, follow through, and do what you need to do to turn your financial situation around.

7. Increase Your Net Worth

The next step is to determine your net worth and begin adding to it.

Determine Your Net Worth:

Your net worth is what you own minus what you owe. Programs such as Mint.com, Quicken, and Microsoft Money will calculate your net worth for you, automatically.

You can also determine your net worth simply by adding up all that you own, including all of your investments, the equity you may have paid into your home, the value of your car, and any other assets you possess; and subtracting what you owe in remaining debts.

Set Up a Savings Account:

Once you know where you stand, you’ll be ready to set up a savings account. You can do this through your regular bank, or begin investing in a mutual fund that pays interest.

Even if you can only afford to set aside $25 or $50 per month, it will begin to add up.

Before you know it, you’ll have an emergency savings plan in place, to protect you in the event that your car breaks down, or your home needs a major repair.

In addition, this regular savings will help you increase your net worth over time.

8. Become Even More Frugal

Unfortunately, all of the work you’ve already done in steps 1-7 will have little lasting value if you don’t change your attitude toward money. Now is the time to become even more frugal and learn to live within your means.

Practice Discipline:

Stop imagining that more money is going to pour in tomorrow—through finally collecting on unpaid child support, winning the lottery, or getting a promotion. If those things happen, great! You’ll be even better off. But living as if they’re going to happen is causing you to spend money you don’t have.

Instead, force yourself to make purchases with cash only. Do not continue to pay outrageous interest payments toward credit cards for purchases you don’t absolutely need. You can get by without that new furniture, right? What else could you skip, in the interest of spending only what you have right now in the bank?

Try These Ideas:

• Check Freecycle before you make another major purchase. Someone else may be giving away the very thing you’d like to buy!
• When you’re getting ready to buy something specific, look for it on eBay first. I buy a lot of my clothes, new-with-tags, through online auctions!
• Forget trying to keep up with “The Jones’s.” You already know your value; don’t get caught up trying to “prove” your worth to others by having “just the right” house, car, or appearance.
• Do not use shopping, ever, to appease your emotions.
• Finally, when you do go to make a big purchase, step back and give yourself a few days–or even a week–to think about it. There’s no reason to suffer through buyer’s remorse and try to justify to yourself purchases that you really can’t afford. Think it over carefully and make those purchases, when necessary, with cash.

9. Schedule Your Own Weekly Financial Check-In

Grab your calendar and schedule a weekly financial update meeting with yourself. This is an extremely important step in managing your personal finances, and it’s one that you need to continue each and every week. During your “meeting” time:

• Pay any bills that are due.
• If your bank statement has arrived, take the time to balance your checkbook.
• Check the balances of your checking and savings accounts.
• Update your debt list to incorporate any recent payments.
• This is also a good time to write out your grocery shopping list and check what’s on sale at your local grocery store this week (either using the store’s Web site or the sales circular that comes in the newspaper).
• Finally, also make note of any upcoming expenses you need to anticipate and plan for.

An attitude of gratitude and finances.

 

 

^{References:
Irby, LaToya. Email interview. 24 Oct. 2008, Huffstetler, Erin. Email interview. 24 Oct. 2008.} 

^{Sources:
Caldwell, Miriam. Email interview. 27 Oct. 2008, Hammond, Bob. “Debt Free Key: 10 Steps for Coping With Credit Problems.” Life Without Debt. Franklin Lakes, NJ: Career Press, 1995. 31-32, Irby, LaToya. Email interview. 24 Oct. 2008. “Spending Plan Online Calculator.” Crown Financial Ministries. 11 Oct. 2008.}

Written By: Jennifer Wolf

Source: thebalance

 

 

 

Raising Kids to Be Smart About Money

Young minds are programmed to absorb and copy the behaviors around them, which means the sooner you instill proper money management skills, the more prone your kids are to become mature and responsible stewards of their own cash-flow in the future.
“Becoming financially literate early in life is fundamentally important to your financial well-being as an adult,” says Micah Fraim, award-winning CPA and best-selling author.

“I was pinching pennies at five years old, calculating the cost of grocery items per ounce, refusing to buy expensive clothes unless they were on-sale and foregoing scoops of ice cream from the ice cream shop, so I could buy multiple gallons at the grocery store,” Fraim says. “Now as an adult, I still have that same mindset and live well below my means.”

The following kid-approved strategies help you teach the core tenets of being financially savvy; in terms they’ll understand and appreciate. Consider how you can use them to teach your little ones to be smart about money.

Find Opportunities for Lessons

At some point, your child will inevitably deplete their allowance on impulse purchases, rather than holding out for the more expensive item they’ve been asking for. Instead of giving them more money, or buying it for them, use this as an opportunity to demonstrate that money is a finite resource, which must be allocated over an extended period. Once you spend, it’s gone until you can make more.

Have a conversation about what else they could have done with that money, or how much longer they would have needed to save to get the big-ticket item they wanted. Perhaps give an example of when you spent foolishly, or better yet, saved enough money to buy something important, like your house or car.

Demonstrate that Income Is Earned

Chores are an easy way to teach children that money must be earned. This tangible incentive for contributing to your household shows them that have to work for what they want, and even do things they may not want to do—i.e. vacuuming and doing the dishes.

The concept of having to earn your money is a positive outcome of rewarding children financially for completing chores. However, some parents find that this method doesn’t necessarily teach money management, making it a bad way to teach children how to be smart about money. The key to avoiding the latter is the set-up.

Susan Borowski, mother and author for Money Crashers, shares how she set this up with her teenage son:

“As a contributing member of the family, my 13-year-old son is expected to do certain chores around the house for free. He can earn money for tackling larger tasks, many of which he can choose, some of which he cannot; the amount he earns depends on the difficulty of the task or how long it takes. This forces us to discuss money each time he takes on a larger task.”

This shows them that they have control over how much they earn, rather than it being a given.

Secondly, keep chores focused on money management with an app like Chore Monster so children can track what they’ve done and earned. This is an easy way to establish a record-keeping system, for both chores and allowance, seeing increases or decreases in money earned over time.

Establish a Record-Keeping System

When your child is consistently earning allowance or money for chores, it’s important that they’re able to account for what happens with that money. The more emphasis you put on this piece of the earning, the more they’ll see the value of managing their funds. They’ll start to notice wasteful spending habits and identify which pitfalls to avoid during their next allowance payout.

Designate a folder where they can stockpile receipts and a notebook where they can track all purchases. This simple method of financial reporting is an ideal precursor to balancing a checkbook, analyzing bank statements, or creating a monthly budget.

Use Visual Aids to Your Advantage

Although the “piggy bank” is a time-honored childhood favorite, this approach to money management doesn’t allow your child to see the positive outcome of their coin stashing. For a more functional alternative, use a transparent mason jar or clear plastic Tupperware container, both of which gives them an unobstructed view of the progressive financial increase that comes from diligent and habitual saving. This tool makes the abstract concept of saving easy to see and understand.

You can also open a bank account for older children. This gives them a chance to become familiar with bank statements, which act as a visual aid. Each time a new statement comes in, they can sit down and look at how much money was put into the bank account and how that’s changed month-over-month. Many banks now offer online portals, as well, where your children can see progress represented in bar and pie graphs; these may be easier to understand and digest.

Encourage Them to Set a Savings Goal

There’s a sense of accomplishment and empowerment in reaching a goal with no shortcuts taken or assistance received. Channel this mindset when encouraging your child to practice economical behaviors. Next time they express interest in the latest gadget, suggest they purchase it themselves and develop a step-by-step plan together, so they feel equipped for the undertaking. This process of setting aside money with a specific goal in mind reinforces the gratification gained from being smart about money and purchasing the item without any help.

It’s never too early to start teaching your kids about how to be financially savvy. Too many people don’t learn about personal finance until it’s too late — like when they’re buried in student loans — so teaching these skills early on is important for setting your children up for success later in life.

 

 

 

Written By: Jessica Thiefels
Source: PBS

14 Things Ridiculously Successful People Do Every Day

Having close access to ultra-successful people can yield some pretty incredible information about who they really are, what makes them tick, and, most importantly, what makes them so successful and productive.

“Whenever you see a successful person, you only see the public glories, never the private sacrifices to reach them.” – Vaibhav Shah

Kevin Kruse is one such person. He recently interviewed over 200 ultra-successful people, including 7 billionaires, 13 Olympians, and a host of accomplished entrepreneurs. One of his most revealing sources of information came from their answers to a simple open-ended question:

“What is your number one secret to productivity?”

In analyzing their responses, Kruse coded the answers to yield some fascinating suggestions. What follows are some of my favorites from Kevin’s findings.

1. They focus on minutes, not hours. Most people default to hour and half-hour blocks on their calendar; highly successful people know that there are 1,440 minutes in every day and that there is nothing more valuable than time. Money can be lost and made again, but time spent can never be reclaimed. As legendary Olympic gymnast Shannon Miller told Kevin, “To this day, I keep a schedule that is almost minute by minute.” You must master your minutes to master your life.

2. They focus on only one thing. Ultra-productive people know what their “Most Important Task” is and work on it for one to two hours each morning, without interruptions. What task will have the biggest impact on reaching your goals? What accomplishment will get you promoted at work? That’s what you should dedicate your mornings to every day.

3. They don’t use to-do lists. Throw away your to-do list; instead schedule everything on your calendar. It turns out that only 41% of items on to-do lists ever get done. All those undone items lead to stress and insomnia because of the Zeigarnik effect, which, in essence, means that uncompleted tasks will stay on your mind until you finish them. Highly productive people put everything on their calendar and then work and live by that calendar.

4. They beat procrastination with time travel. Your future self can’t be trusted. That’s because we are time inconsistent. We buy veggies today because we think we’ll eat healthy salads all week; then we throw out green rotting mush in the future. Successful people figure out what they can do now to make certain their future selves will do the right thing. Anticipate how you will self-sabotage in the future, and come up with a solution today to defeat your future self.

5. They make it home for dinner. Kevin first learned this one from Intel’s Andy Grove, who said, “There is always more to be done, more that should be done, always more than can be done.” Highly successful people know what they value in life. Yes, work, but also what else they value. There is no right answer, but for many, these other values include family time, exercise, and giving back. They consciously allocate their 1,440 minutes a day to each area they value (i.e., they put them on their calendar), and then they stick to that schedule.

6. They use a notebook. Richard Branson has said on more than one occasion that he wouldn’t have been able to build Virgin without a simple notebook, which he takes with him wherever he goes. In one interview, Greek shipping magnate Aristotle Onassis said, “Always carry a notebook. Write everything down. That is a million dollar lesson they don’t teach you in business school!” Ultra-productive people free their minds by writing everything down as the thoughts come to them.

7. They process e-mails only a few times a day. Ultra-productive people don’t “check” their e-mail throughout the day. They don’t respond to each vibration or ding to see who has intruded into their inbox. Instead, like everything else, they schedule time to process their e-mails quickly and efficiently. For some, that’s only once a day; for others, it’s morning, noon, and night.

8. They avoid meetings at all costs. When Kevin asked Mark Cuban to give his best productivity advice, he quickly responded, “Never take meetings unless someone is writing a check.” Meetings are notorious time killers. They start late, have the wrong people in them, meander around their topics, and run long. You should get out of meetings whenever you can and hold fewer of them yourself. If you do run a meeting, keep it short and to the point.

9. They say “no” to almost everything. Billionaire Warren Buffet once said, “The difference between successful people and very successful people is that very successful people say ‘no’ to almost everything.” And James Altucher colorfully gave Kevin this tip: “If something is not a ‘Hell Yeah!’ then it’s a no.” Remember, you only have 1,440 minutes in a day. Don’t give them away easily.

10. They follow the 80/20 rule. Known as the Pareto Principle, in most cases, 80% of results come from only 20% of activities. Ultra-productive people know which activities drive the greatest results. Focus on those and ignore the rest.

11. They delegate almost everything. Ultra-productive people don’t ask, “How can I do this task?” Instead, they ask, “How can this task get done?” They take the I out of it as much as possible. Ultra-productive people don’t have control issues, and they are not micro-managers. In many cases, good enough is, well, good enough.

12. They touch things only once. How many times have you opened a piece of regular mail–a bill perhaps–and then put it down, only to deal with it again later? How often do you read an e-mail and then close it and leave it in your inbox to deal with later? Highly successful people try to “touch it once.” If it takes less than five or ten minutes–whatever it is–they deal with it right then and there. It reduces stress, since it won’t be in the back of their minds, and it is more efficient, since they won’t have to re-read or re-evaluate the item again in the future.

13. They practice a consistent morning routine. Kevin’s single greatest surprise while interviewing over 200 highly successful people was how many of them wanted to share their morning ritual with him. While he heard about a wide variety of habits, most nurtured their bodies in the morning with water, a healthy breakfast, and light exercise, and they nurtured their minds with meditation or prayer, inspirational reading, or journaling.

14. Energy is everything. You can’t make more minutes in the day, but you can increase your energy to increase your attention, focus, and productivity. Highly successful people don’t skip meals, sleep, or breaks in the pursuit of more, more, more. Instead, they view food as fuel, sleep as recovery, and breaks as opportunities to recharge in order to get even more done.

Bringing It All Together

You might not be an entrepreneur, an Olympian, or a billionaire (or even want to be), but their secrets just might help you to get more done in less time and assist you to stop feeling so overworked and overwhelmed.

 

 

Written By: Travis Bradberry
Source: Inc.

How to Talk Money with Your Spouse

Ugh. You know you should talk to your spouse about money, but every time you do, someone gets angry, feelings get hurt and you promise yourself you’ll never bring up the subject again.

Am I right?

OK, I’m sure some of you can talk money like a pro with your spouse, but I’m willing to bet a whole bunch of you dread the thought. I’m a saver who used to be married to a spender. I know.

Even though you may think it’s a lost cause, you still need to try to keep the lines of communication open. Edelman Financial Services found 44 percent of surveyed couples believe money is the root cause of most divorces.

“Financial pressures can lead to the breakdown of the family,” David Bach told me. Bach is the vice chairman of Edelman Financial Services and author of “Smart Couples Finish Rich.”

His research found that being on the same page financially with a spouse not only helps keep you out of divorce court, but it can also fatten your bank account. Of those who discuss finances with their spouse, 36 percent have savings of $100,000-$499,000.

How do you have healthy money conversations with your spouse? Here are five suggestions from the experts.

1. Make it a scheduled event

© altrendo images/Getty Images A woman writes in her calendar. 

The problem with most money discussions is that they usually arise when there is a problem. When one person says, “Honey, can we talk about the budget?” the other person may instantly think, “Ugh, what’s wrong?” Or they may assume they’re in trouble for spending too much.

Either way, it puts the other person on the defensive or in a foul mood right from the get-go.

Instead, agree on a specific day for a monthly review of the family finances. It could be the first Friday of the month or on each payday. It doesn’t have to be long or involved either. It could be as simple as 10 minutes spent going over last month’s cash flow and identifying major or periodic expenses coming down the pipeline.

A regular meeting gets both spouses on the same page financially and ensures they both take ownership of family finances. I asked Anne Malec, a licensed marriage and family therapist and author of “Marriage in Modern Life,” what she thought was the biggest mistake couples make when having money conversations.

“It’s probably the feeling that it’s one partner’s issue to solve [money] problems,” she told me. However, a monthly meeting takes the burden off one spouse to work alone to balance the budget.

2. Pair it with something fun

© Portra Images/Getty Images A couple chats during a dinner date. 

To sweeten the appeal of a monthly money discussion, pair it with something fun. Bach is a fan of “money dates” and notes that he has clients who always follow up their appointments with him with a movie or dinner out.

“My really happy couples don’t look at their money as drudgery,” he explains. Instead, they use financial meetings as an excuse for a night out.

You don’t have to see a financial planner to make a money date work for you. Simply plan to have your money conversation at your favorite restaurant or if that’s too extravagant for your budget, follow up an at-home money talk with a rented movie and homemade treats.

The point is, make it fun so your spouse doesn’t think of the money talk as work. They might still not love the idea, but they may be willing to endure it with a smile because they know something good is happening afterward.

3. Focus on goals, not bills

© Jupiterimages/Getty Images A stack of bills.

Another tip that can make money talks less painful is to focus on shared goals, not everyday bills. Bach suggests couples open a dream account where money can be put aside for a vacation, travel or some other family priority.

“Money is just a tool to design your best life,” Bach says.

Rather than focus on how little you may have, focus on how to make the best use of it. By talking about goals, you’ll naturally bring in a discussion of bills as well. For example, if you and your spouse want to take an anniversary trip, you both may be more likely and willing to cut back in other places.

4. Bring in a third party if needed

© Paul Simcock/Getty Images A couple meets with a financial planner. 

Sometimes your bad money habits are so ingrained that bringing in a third party to air out the topic is necessary. You could use a marriage and family therapist like Malec or a financial planner like Bach. Or you could go a different route if that’s not in the budget or if your better half balks at the idea of talking about money problems with a stranger.

Bach suggests working through a financial book or workbook together or attending a financial seminar to jump-start the discussion. In my situation, I told my husband I’d like us to attend Dave Ramsey’s Financial Peace University program as a Christmas present. Was he happy to go? No. Did it change our family finances and marriage? You bet.

5. Understand your partner’s perspective

© Richard Elliott/Getty Images A young couple looks over their expenses. 

Finally, talking about money with your spouse requires a great deal of patience and empathy. Your spouse probably isn’t purposefully being difficult. They simply may have a different understanding of money and different expectations than you.

“Each [spouse] has money beliefs about how it’s all going to work,” Malec says. “These beliefs aren’t articulated but they are acted out.”

So while your spouse’s money habits might get on your last nerve, remember that they are probably only doing what they saw modeled at home growing up. Or at least give them that benefit of the doubt.

“You’re in this together,” Bach says. Once you start playing the blame game, you stop working as a team. And once you stop working as a team, you might find yourself agreeing with the 44 percent of people who say divorce and money disagreements go hand-in-hand.

Written by Maryalene LaPonsie of Money Talks News

(Source: Money Talks News)

30 Essential Money Habits

© Provided by GoBankingRates

Your financial health, just like your physical health, is built on dozens of small, daily decisions that eventually form habits. And while eating better and exercising more are well-known habits that will get you fit, sometimes the money habits that lead to financial health are much less obvious — though both topics can inspire plenty of debate.

While every person’s financial situation is different, there are still habits that will nearly always have a positive impact on your money. These are the 30 essential money habits you can follow each day, week or month to get control over your money and build wealth instead letting your finances control you.

For financial health and wealth, adopt these 30 good money habits.

1. SPEND LESS THAN YOU EARN

This habit is Money 101. It’s always going to be true that you’ll never get ahead financially if you always have more money going out than coming in. The great news is there are two ways you can work on this habit: Focus both on growing your income and controlling your spending to live within your means.

2. PAY YOURSELF FIRST

When people say “pay yourself first,” they mean you should take your savings out of your paycheck as soon as it hits your checking account to make sure you save something before you spend it all on bills and other expenses. The key to saving successfully is to save first, save a lot — 10 to 20 percent is often recommended — and save often.

3. MAINTAIN AN EMERGENCY FUND

Virtually every personal finance expert agrees that an emergency fund is central to financial health. Building and maintaining an emergency fund can help you avoid debt and give you a reserve to draw from, which can also help you keep your financial goals on track even through life’s setbacks.

Start small by saving at least one month’s worth of expenses and then work your way up to saving a larger emergency fund, such as a year’s worth. Having several months’ worth of expense money saved up can protect you against financial concerns when crises like job loss or medical emergencies come up.

4. BUDGET FOR ‘EXTRA’ EXPENSES

In addition to basic living expenses and bills, you should also budget for other purchases you’re in the habit of making. Whether it’s buying a coffee twice a week, eating out on the weekends or buying gifts for friends and family, these seemingly little expenses can add up and suck your budget dry if you don’t plan for them.

Write down everything you’ve spent money on in the past month — go back farther if you can remember or look up transaction records and receipts — and categorize each expense. Rank each category by how important it is to you. Add the top three priorities as line items in your budget, such as $100 a month for date nights or $20 a month to buy supplies for your hobby. For everything else, work on dropping those spending habits or finding cheaper alternatives like brewing your coffee at home.

5. SAVE FOR THE UNEXPECTED

Extra costs can come up frequently, and whether or not they’re true emergencies, they can still set you back. Maybe your tooth filling falls out, your pet decides to eat half a rug and needs emergency medical care, you get a flat tire or your kid wants to start playing a sport. Your finances will get hit twice as hard by these unexpected expenses if you don’t have extra money saved to cover them.

Having a “buffer fund” can create a little bit of wiggle room in your accounts so you can pay for these costs without going into debt or pulling money from your emergency fund. Try socking away $1,000 for each member of your household, for example — including pets.

6. GET — AND STAY — INSURED

In addition to a buffer fund, you should also consider insurance. Insurance is an important protection that can stand between you and bankruptcy due to a major emergency. Start with the must-have: health insurance. Medical debt is one of the most common causes of financial hardship, out-of-control debt and bankruptcy, according to the Consumer Financial Protection Bureau. Half of all overdue debt listed on credit reports is medical debt, affecting 43 million Americans, reports the CFPB.

Other forms of insurance also can help protect you against major expenses. Car insurance is not only a good idea but also is required by law in nearly every state. If you’re the breadwinner with kids, you should probably get a hefty term life insurance policy and you might also consider getting disability insurance. Stay current on all policies so coverage will never lapse when you and your family need it most.

Other types of insurance that you might also benefit from having could include:

• Homeowners’ insurance or renters’ insurance
• Pet insurance
• Guaranteed auto protection insurance
• Dental insurance

7. SET FINANCIAL GOALS

To know what daily money habits to focus on and prioritize your money management the right way, you have to know what you’re trying to accomplish. Review your finances. Look specifically for the biggest drains on your money, such as overdraft fees or high-interest debt, and also spend some time thinking about what you’d like your finances to look like in the future. Then, identify specific steps required to achieve your short- and long-term money goals.

8. REVIEW YOUR PROGRESS REGULARLY

Set aside time each week to check on your financial goals. Did you make progress? Were there any setbacks? Track how you’re doing and celebrate your wins — not by splurging though — to keep yourself motivated and on course.

9. TRACK YOUR MONEY

You can’t put your money where it matters if you don’t know where it’s going. Figure out a system to keep track of your financial transactions. Whether you prefer using pen and paper to reconcile your bank accounts the old-fashioned way or using finance-tracking apps like Mint or LearnVest, you need to have a clear picture of what is happening with your money. Tracking your spending can help you quickly identify problem areas that you can improve on and see the progress you’re making.

10. CHECK FINANCIAL ACCOUNTS OFTEN

As part of keeping track of your money, you should check on all financial accounts on a regular basis. You should review spending accounts, like credit cards and checking accounts, daily in terms of checking balances and tracking expenses. Review bills such as loans when making monthly payments and updating your budget to make sure you avoid overdraft or late fees.

Savings accounts should get a once-over weekly or monthly to keep them on track. Retirement accounts and investments can be reviewed less frequently, such as monthly, quarterly or biannually.

11. CARRY ONLY THE MONEY OR CARDS YOU NEED

If your wallet is so full that you can hardly close it, consider limiting what you choose to carry to the bare necessities: one debit card, enough cash to cover a meal or ride home, and one form of identification (but not your Social Security card). You can’t spend money you don’t have with you, so leave credit cards and extra cash at home to resist the temptation to spend. Leaving credit cards at home can also limit your vulnerability to identity theft should your wallet ever be lost or stolen. Plus, charging all purchases to the same debit card and linked account will make it simpler to track your spending.

12. PAY BILLS ON TIME

Not only will paying bills on time save you money on late fees and penalties but it is also key to financial peace and health. If making payments on time is a struggle for you, review each bill you pay on a monthly basis and write down the due date. Set reminders on your calendar, alerts on your phone or sign up for reminder emails if they’re offered so that you never miss a payment.

13. AUTOMATE YOUR MONEY

Another way to avoid late payments is to automate your transactions. For payments, set up automatic transfers through your bank’s online bill pay service to send money out to pay bills at least three days ahead of the due dates.

Automation is also great for the “paying yourself first” habit. If you have a retirement account through work, set up automatic contributions. If you get regular paychecks in fixed amounts, set up automatic transfers to move money from your checking account to a savings account or retirement fund right after payday. Monitor these automatic transfers so that you never overdraft an account.

14. PRIORITIZE PAYING DOWN DEBT

Interest and debt will hold you back financially. It’s nearly impossible to get ahead and create a financially secure future when you’re always paying off yesterday’s purchases. Budget for paying down debt and consider temporarily cutting back on something, such as dining out, so that you can put more money toward getting out of debt. Pay more than the minimum due on your monthly bills when possible.

Some financial experts recommend paying off high-interest debt first whereas others suggest starting with the smallest balance first. Assess your debt and pick the method that works best for you.

15. AVOID NEW DEBT

High-interest debt like credit cards or payday loans can be extremely difficult to pay off, especially if you’re already in debt. Get spending habits under control and avoid new debt. Try leaving your credit card at home or cancel it altogether if doing so won’t hurt your efforts to improve your credit score. Having an emergency fund can help you avoid new debt by covering costs with savings instead of putting them on credit cards.

If you are considering going into debt, make sure it’s because the debt will help you work toward important goals like owning a home or getting a degree. And, of course, try to only take on short-term, low-interest loans or credit if possible.

16. BUILD YOUR CREDIT

It can be easy to get complacent about your credit score and forget to pay attention to your credit report — until you try to get a home loan or turn in a rental application and are reminded of how important they are. Check your credit reports yearly and get any issues resolved if there are errors on your them. Make sure you’re managing your credit well by paying off bills on time and keeping balances low. These habits can help you avoid high-interest costs as well as build your credit.

17. INVEST IN YOURSELF

“Invest in as much of yourself as you can,” said investing titan Warren Buffett. “You are your own biggest asset by far.”

The best place you can put your money is into improving your value and net worth. From daily habits like eating well and getting enough sleep to big life steps like finishing school or switching careers, you should adopt the mindset to always be seeking to grow and achieve goals that have long-term benefits.

18. LOOK FOR NEW EARNING OPPORTUNITIES

As much as controlling spending and saving are essential habits, earning more money can be just as important. Look for ways to increase your income. It could be something small, like babysitting once a week or walking your neighbor’s dog along with yours.

Find a way to make some money with a hobby, such as by selling crafts online or busking on the weekends. You might even consider getting a second job.

If your time is too limited for these options, look for ways to increase your pay at your day job. Find out what would be required to earn a raise and then go for it. Acquire new skills and education that can increase your earning potential.

19. GROW AND INVEST YOUR MONEY

In addition to looking for ways to earn money, financially savvy people also look for ways to grow the money they have. That can be as simple as finding a high-yield savings account for an emergency fund or as challenging as learning to manage a portfolio of investments. Compound interest is a powerful force, and if you get it to work for you, it can be your secret weapon to financial independence.

20. SAVE FOR RETIREMENT

Saving early and frequently is one of the secrets to retiring with financial security. Don’t put today’s wants ahead of tomorrow’s needs. Set up a retirement account and start adding to it each month.

Figure out how much you need to save before you retire and make a concrete plan to do it. Learn more about financial planning and investing to grow your money and keep up with inflation.

21. GET YOUR 401(K) EMPLOYER MATCH

Along with saving for retirement, make contributions to employer-sponsored retirement accounts, especially if your employer will match your contributions. Employer contributions are free money, and all you have to do is set a little money aside for retirement, which is what you should be doing anyway.

22. LEARN TO WANT (AND BUY) LESS

Resist the urge to buy this product and pay for that service to be happy, attractive, fun or anything else that marketing campaigns are designed to make you think. Practice mindfulness through diligent budgeting and possibly through habits that can help you improve how you feel, such as meditation and gratitude journaling, so that you remember to appreciate what you have. Make sure that you’re the one deciding what your money should be spent on, not marketers or your peers.

23. DO IT YOURSELF

Convenience is attractive but it also can be expensive. Some services are worth paying for so that you can free up your time — or avoid incurring more costs by botching the job — but you can save yourself potentially thousands by getting in the habit of tackling many projects, chores and problems yourself. Simple things like preparing meals at home, doing your own laundry instead of sending it out, and buying a manicure kit to maintain your own nails can add up to big savings.

24. SHOP WITH A PLAN

Shopping mindlessly leads to overspending and indulging in impulse buys. Planning ahead, especially when grocery shopping, can help you stick to buying what you actually need and avoid wasting money. Make a shopping list, stick to it and try to get in and out of the store as fast as possible.

Keep a running list of household items you’re running low on and consolidate errands into one shopping trip. Waiting to go to the grocery store, pharmacy and post office in the same trip, for example, can save you time and gas money.

25. COMPARE COSTS ON EVERYTHING

To spend money wisely, you need to be able to decide if what you are getting is a good enough value to justify the cost. Get in the habit of comparing prices of products as well as comparing prices against their value to you. Some personal finance experts suggest you start by comparing your hourly wage to the cost of the item you want to buy. For example, is that pair of shoes really worth three hours of pay? Then compare the cost of the thing you want to other things you could use the money for, such as paying off high-interest debt.

Lastly, compare the actual item to others like it. Is there a less-expensive alternative that offers the same product or service at a lower cost? If you spend a little more, can you get a better version that would last twice as long? Weighing these options can help you buy less junk, cut down on waste and lead you to choices that offer real value and higher quality.

26. USE COUPONS AND ASK FOR DISCOUNTS

Look for coupons, deals and discounts. Whenever you make plans to spend, whether it’s heading out to the bar with friends or signing up for a new internet service, check for deals and look for ways to spend less. Maybe the bar has a happy hour and you can save money by getting together earlier. The cable and internet company could be offering a special deal for new customers. Even your credit card issuer might give you a rate discount if you ask.

Only look for deals once you’ve already decided your purchase is a smart one. Don’t use discounts and coupons to justify frivolous spending.

27. LEARN FROM FINANCIAL SETBACKS

Almost as important as knowing the right things to do is knowing how to get back on track when things go wrong. Almost everyone faces financial setbacks at some point, including some major nail-biters. But even small choices, such as stopping at the drive-thru instead of waiting to eat at home, can get you offtrack. Once you start slipping, you might fall into a pattern of overspending.

Practicing the habit of facing setbacks head-on and maintaining your financial discipline even in tough times can help you prepare for bigger money crises that could come your way. And since hindsight’s 20/20, look back on past financial missteps so that you can identify what went wrong and how you can prevent those problems in the future.

28. CORRECT BAD HABITS

As you set and practice new, financially healthy habits, you can’t let yourself off the hook for those few bad habits that will inevitably stick around. As Warren Buffett put it, “The chains of habit are too light to be felt until they are too heavy to be broken.”

Maybe you avoid problems when they come up instead of quickly resolving them or you too easily justify overspending when you’re out with friends. Chances are you have a handful of habits that are tripping you up again and again, and these bad habits can potentially do more damage than good habits can fix.

Whatever the issue, don’t let yourself sabotage your efforts to build wealth. Along with building positive habits, work to get past your financial weaknesses and be honest with yourself if you’re spending to fulfill an emotional desire instead of meeting a true need.

29. EDUCATE YOURSELF ON FINANCES

If you’re serious about building financial health and wealth, then you need to educate yourself. After all, you can’t make the best financial choices if you have no idea what your options are and how each decision will impact your life and money down the road. Start small by reading some personal finance books and spending a few minutes each day reading personal finance articles (just like you are right now).

When researching options to make a decision, dive deep into the pros and cons of your choices. Whether you’re shopping for a car loan or the right mortgage or are trying to find the right financial planner or investment vehicles, you’ll be able to make decisions wisely and confidently when you have learned as much as you can about the topic

30. GIVE BACK

There are a lot of ways to get rich, but giving back is the surest and fastest way to feel rich. One study by a pair of Yale and Havard Business School graduate students found that the psychological effect of giving back is so powerful that it can actually diminish a person’s desire to overspend or engage in other poor money habits stemming from a compulsion to assert or display wealth.

Written by Elyssa Kirkham of GoBankingRates

(Source: GoBankingRates)