5 Things That Good Money Managers Do

To some people, the words “financial sustainability” sound like Greek. When you start out in the real world as a teenager or college student, it is easy enough to find a job, get a free checking account, and start your financial life of earning, spending and maybe even saving. However, too few of these financial fledglings are actually taught good practices for handling their money. Luckily for them, the Internet provides a wealth of knowledge. Here are 5 things that good money managers do that people of all ages can learn from:

1) Know exactly where your money is going each month. A lot of people have only a vague idea, a fuzzy schedule in their head of what their money is allotted for each month. If you’ve got cash to burn, then maybe that’s not the worst thing in the world, but for most people who live paycheck to paycheck, that is setting themselves up for disaster. Having a physical schedule, like a calendar, with all of your monthly payments is a good way to keep ahead of your finances.

2) Contrary to popular belief, a huge tax return should be avoided. It may be nice at the time, since everyone loves getting a huge check from seemingly out of nowhere. Those who are blessed with money smarts, however, will usually opt out of the big check for saving money by not having too much tax withheld from their hard-earned paychecks. Not only does this mean you don’t have this money in the case of an emergency, but you are also missing out on earning interest on that money if you were to invest it in a CD or other interest-earning account. Check over what your work is withholding and make sure it is the correct amount.

3) Putting a limit on needless spending. There are big and necessary monthly expenses, and then there are upsized sugary coffee drinks that you crave every afternoon at 3:00 pm. One of these you can probably skip out on. Extra expenses add up, and money-savvy people tend to add up the estimated extra costs per year, divide them by 12, and add them in as monthly expenses in order to budget for them.

4) Do not save whatever is left at the end of the month. Save at the beginning of the month, or whenever your paycheck comes in. The logic here is that more often than not there is not much if anything left at the end of the month, which means there can be no savings.

5) Payments on credit card debt should be made on debts with the highest interest, not the lowest debt amount. It’s true that paying credit card debt is far better than ignoring the fact that it exists. However, you can be smart about how you pay it off so that it will save you money in the long run. This means focusing on paying off the ones with the highest interest rates, rather than the ones that are smaller but have 0% interest. 

To learn more about financial sustainability and how to be more bank savvy, click here!