Unless your parents are millionaire you probably have to work hard for your money. If you’re putting in 40+ hour work weeks to earn a living it’s important to be smart about money management so you’re not wasting it. And by this we don’t mean just tracking your debit and credit card spending, paying all your bills on time or doing things to minimize as many fees as you can. We also mean you need to have a budget and stick to it and take advantage of interest rate offers and rewards that would help maximize your account balances.
But if you want to be a really smart money manager here are tips that will help you get there.
Make everyday purchases with your debit card
Your debit card is linked directly to your checking account. When you use it for all your everyday purchases this will immediately help you track your spending and establish better financial habits. If you’re already a pretty savvy about money management, you’ll have a checking account you can easily access online.
Assuming that you do use your debit card for your everyday spending you then won’t have to wait for a statement to arrive in the mail. You’ll be able to go online, review your spending and check your balance as often as you wish.
Create a budget that will help you save
If you don’t already have a budget you need to create one or you can’t be really good at money management. This is the only way you can budget for necessities and save money. You will need to first determine your monthly take-home pay and then budget for your fixed expenses such as housing, transportation, food, utilities, etc. You will also need to allow for your variable expenses which typically includes clothing, entertainment, hobbies, education and eating out.
Finally, you absolutely need to budget for saving. One of the simplest ways to budget is called the 50/20/30 method. It’s where you budget 50% of your take-home pay for your essentials (as noted above) 20% for savings and 30% for personal or the variable expenses listed above. Use this method and you’ll be assured that you’ll be saving money regularly for an emergency fund, retirement or another important goal. And that’s really smart money management.
Go online and review your account regularly
As mentioned above the easiest way to keep track of your spending is to have a checking account you can access online. If so, then plan on checking it at least weekly to ensure that you’re keeping within your budget. This is also a good way to spot any suspicious or fraudulent activities on your account. Plus, this will help you avoid overdrafts, which would mean a hefty fee or even a debit transaction being declined, which could be a tad embarrassing. Some financial institutions make it easy for you to avoid this by sending you – via email or text– low balance alerts.
Savvy money management means keeping good records
If you want to be a really smart at money management you need to keep records of the withdrawals and deposits you make at your bank or savings institution. You should also keep your receipts until at least your next billing cycle. If you do this and find issues on your billing statement or account that you can identify as errors, you will have the records to prove your case.
Cancel everything you don’t need
You’re probably on an automatically recurring billing schedule with at least one company and probably several. This might include payments to your cable company, your rent, your insurance premiums, a health club membership or some magazines. The problem with these recurring payments is that once you set them up – especially if they fall in the category of discretionary spending – it’s easy to forget about them. In fact, you could still be paying for a subscription service you quit using several years ago.
Go through your monthly account statements and have a good heart-to-heart talk with yourself about those services you’re using and those you’re not. Then cancel any service you’re no longer using or that don’t add any quality to your life.
Take advantage of all the free money you can
There are many credit cards and even some debit cards that offer rewards based on your spending. However, they can expire. This includes things such as cash or merchant coupons and discounts. We have one card that offers 5% cash back when you use it to buy stuff like gasoline or groceries. However, these deals are offered on a quarterly basis so if you don’t take advantage of them before the next quarter rolls around you’re out of luck. Be sure to keep an eye on things to make sure your rewards or points are accumulating and that you know what you need to do to cash them out.
Keep your account from being hacked
Unless you live somewhere where there’s no newspaper and no Internet you’ve seen that accounts are hacked almost monthly. One of the biggest of these was Target Stores, which had the names, mailing addresses and phone numbers of more than 40 million customers stolen.
There’s not much you can do about massive breaches like this but for smart money management, you can protect your accounts by having one password for each account and never sharing it with anyone. Have you created the same password for PayPal as your Netflix account? That’s just not a good idea. But it’s an even worse idea if you use the same password for your banking account and your email as this makes you much more vulnerable to identity theft. Also, never access your checking or savings account on any public device or Wi-Fi such as at a public library or retailer that you can’t totally trust.
If you go online and find any suspicious activity on your account be sure to report it immediately to minimize your liability and stop any future financial damage. If your identity is stolen most credit card companies limit your liability to $50 and may even waive that. Unfortunately, it’s a different story with debit cards so it would be smart to check with your bank to see what its policy is if you’re the victim of identity theft.
Finally, here is a short video with some good tips for keeping your online accounts secure.