With the blustery days of autumn whipping up colorful leaves and cool breezes, ‘tis the season to get cozy—and the season to spend some quality time fortifying your finances. Unsure where to start? Read on for five habits to strengthen your finances in the coming months.
Many people prefer to budget monthly, but if you’re just starting out with the practice, try budgeting weekly. Every week, sit down and make a list of everything you spent over the last seven days. You can use an app, but a pen and notebook work equally well. Once you know how much you’re spending and on what, you’ll be ready for the next step of budgeting: planning ahead. Are you satisfied with your outgoing expenses? Is there any way to reduce expenses in some areas, in order to save or pay off debt? Budgeting gives you control over your finances, once week at a time!
When you live within your means, it’s far easier to save money, pay off debt, build an emergency fund, and achieve a number of other financial goals. The key to living within your means is to spend less than you earn and avoid taking on unnecessary debt. Sure, you could get financing for a brand new, top-of-the-line vehicle—but you could also buy a reliable car outright and avoid the monthly payment altogether. Living within your means is all about spending less to save more, which often leads to a richer life with less stress and far less debt in the long run.
It’s useful to think about debt as belonging to two categories. “Good” debt helps you increase your financial wellness over time. A student loan may increase your earning potential, while a home loan offers stable housing and the proceeds of a future stable. “Bad” debt, on the other hand, refers to high-interest debt—usually emerging from unpaid credit card bills or predatory loans. If you’re holding onto high-interest debt, make it a priority to pay this off! The longer high-interest debt sits around, the bigger it will grow and the harder it will become to achieve financial wellness.
Everyone has different financial goals, and as you get older, these goals will naturally change. Whatever your age, it’s always a good idea to write down your goals so you know what you’re working toward. Some goals to consider may be: save for education, pay off student loans, save for a home, pay off debt to increase your credit score, start an Individual Retirement Account (IRA) or save for a vacation. If your goal involves saving money for a special purpose, consider opening a separate savings account so you can track your savings and watch your hard work grow.
The healthiest habit for your finances has nothing to do with spending or saving money—it’s about education! Grow the habit of regular financial education and you’ll grow your financial wellness. The Harvard FCU blog is a great resource to learn more about retirement funds, debt payoff strategies, credit score improvement and more. And, Harvard FCU members get free access to the GreenPath Financial Wellness Program, including free debt counseling, a debt management plan, federal student loan counseling and other personal, educational services.