Start These Three Financial Habits Today

piggy bank teach you how to saveHaving trouble saving? You’re not alone. A recent survey conducted by Bankrate found an estimated 76 percent of Americans are currently living paycheck to paycheck. While this way of living may be sufficient for a little while, how long can you maintain it?

The key to being better with your money is to be smarter with it, and to be smarter with it means you need to stop wasting it. With that said, here are three habits you need to start following today. Trust me; if you follow these tips, you’ll see the effects immediately.

1.Automate Your Savings Automatically—By Making Them Automatic

One of the easiest ways to make sure you’re saving is to automate your savings account. When I was younger (and more naïve), I would always plan on saving a specific amount each month, yet for some odd reason I’d take the money out of the bank and put it in an envelope, saving it in case of an ‘emergency.’ Usually, those ‘emergencies’ were a new pair of shoes that were twice marked down (How could I resist?), or a much-needed night out with friends. Needless to say, the money I intended to save went toward impulsive—albeit fun—purchases, and by the end of the month I was right back to where I started: broke and with no savings.

I eventually got tired of living off Ramen noodles for the last week of every month and really started forcing myself to save. How? By doing what I should have done years ago and automating my savings account.

Now, every time my paychecks go through, my bank automatically takes a portion of my choosing and deposits it into my savings account. I never see the money, so I never have the opportunity to spend it. It’s a genius thing, and the best part is that you don’t even have to lift a finger. A good rule of thumb is to save 15-20 percent of your monthly check. So, for instance, if your check is $1,000, you’d want to save between $150-200. (Of course, this is just an example—the amount you should be saving really depends on your particular budget.)

Most banks offer this service free of charge, so pick up the phone and call your bank today!

2.Shop Effectively By Following the Tried-and-True Approach to Smart Spending

Now that you’ve made sure you’re saving every month, let’s make sure you never need to tap into it.

It’s a simple concept: you want something, so you go out and buy it, and after you buy what you wanted, you’re perfectly content and everything’s peachy. Sound about, right? Eh, not really. Though there’s plenty of scientific data behind the fact that buying something makes you happy, what about the aftereffects?

The best way to practice effective money habits is to differentiate your wants from your needs. Want to know the one tried-and-true, be-all, end-all, surefire way to do that? Just wait.

No, really—you wait. If you see something you want, or if you’ve been thinking about buying something, give yourself two weeks. If after 14 days you’re still of the same mindset, then the purchase is obviously something you really want and is therefore no longer an impulsive buy.

This trick works for both big and small purchases (but it’s especially effective with the bigger spends), and although I wish I could take credit for this lovely little nugget of financial fortitude, I can’t. This trick’s been around for years (though I shortened the time from 30 days to two weeks—you’re welcome).

The next time your window shopping and see something you really want, let it simmer for a bit. And if you’re worried about a particular item selling out, don’t! That’s what the Internet is for!

3. Make a List. Check it More Than Twice

A recent Gallop Poll found that a whopping 75 percent of Americans don’t effectively budget, and if you’re reading this, chances are you don’t either.

The last—and probably most important—step in breaking bad money habits is to realize what those habits are, and to do that you need to have a rock n’ budget!

Now, I’m not going to sit here and give you a bunch of malarkey about why you should budget—you already know that. Instead, I’m going to show you how you should budget.

Making a Bulletproof Budget in Four Easy Steps:

  1. The first step is to tally up how much money you earn each month after taxes—after you’ve taken the aforementioned amount out for your savings, of course. (You should already know this, but if you don’t, well, that’s just another reason for you to make a budget.)
  2. After you’ve calculated your monthly income, the next step is to calculate your monthly bills (by this I mean your set monthly obligations, such as rent, utilities, student loan payments, etc.).
  3. Next, take some time rifling through your previous bank statements. Check to see how much you spent on food, gas, and on other everyday expenses. With evidence in hand, effectively write out a budget (one that includes enough elbow room for unexpected circumstances) for how much money you’re allowed to spend each month.
  4. Finally, put your budget into a spreadsheet, and print out as many copies as you see fit. Here’s a great (and free!) template you can use.

Do not—I repeat—DO NOT go over your budget. If you feel your budget is too small, change the amount you’re allocating to your savings. I know it probably sounds weird for me to advocate reducing your savings after I’ve harked on and on about the importance of saving every month, but it’s better to save a little than to save nothing at all. Plus, this way you’ll feel guilty enough NOT to tap into your diluted savings account.

One last note: If you’ve found yourself following my advice but are still having trouble making ends meet, fret not! We’re here to help. Our credit counselors can help put an end to your financial problems. It’s what we do, and we’re good at it. Call us at 800-851-0720 – the budget advice is free, so contact us today!