You may think that saving receipts and checking your 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 farther from what real money management is.
Here are 5 ways you can tell you are managing your money well:
1. The first step you can try (and its suggested by many financial planners) is to pay cash for your purchases instead of using your credit card and debit card for at least one month. It can help you better visualize your budget when you can see where your paychecks are going and what you’re spending.
2. After you have evaluated where your money is going, you’ll need to create a budget to help keep you on track. Don’t worry, its a lot easier than it sounds.
3. You will want to set up an automatic savings plan. To do so, 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. You can start to reduce your debt. If you set up an appointment with a debt counselor or debt management consultant they can give you all sorts of good ideas on how to manage your money and your debt in a way that works for you.
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.
