Many times we think that saving receipts and checking the our account online constitutes “money management.” Others consider the fact that they can whip out the credit card for major purchases means they have a handle on their money. Well that couldn’t be any farther from what money management is.
Here are 5 ways to know you are managing your money:
1. The first step suggested by many financial planners is to pay cash for your purchases instead of using credit cards and debit cards for at least one month. It helps when you can see where your paychecks are going and what you’re spending.
2. After you have evaluated where you’re money is going create a budget to help keep you on track, and establish financial goals.
3. Set up an automatic savings plan. To do that, contact your bank or financial institution. Get a separate account – preferably one that is not linked to your debit card so you won’t be tempted to dip into it. If you’re trying to save money to pay down debt, you can set up an automatic payment plan.
4. Reduce your debt. See a debt counselor or debt management consultant if needed.
5. Plan for your retirement. See a financial planner if needed.
According to CardWeb.com and MyVesta.org, the average American family carries more than $8,000 in credit card debt, (up from about $3,000 in 1990) and spends about $1.22 for every dollar they earn. You can stay away from the average and live debt free if you take the right steps in managing your money.
