Is your bottom line looking a bit sickly these days? To restore your finances to health, you need to develop better money habits.
A healthier money lifestyle can only be achieved when you change how you think about cash. Here are five ways to do it.
1. Give yourself a money checkup
With each paycheck -- or maybe at the beginning of the month -- take time to give yourself a money checkup.
Set aside a time where you, your spouse and other family members discuss the household budget, and determine how much you need to spend and save.
2. Plan for the future
Create both short-term and a long-term goals for your finances. Such financial goals may include:
- Paying off debt
- Saving for a loved one's college expenses
- Building a better emergency fund
After you have identified your goals, determine the necessary steps to bring your goals to pass. Write these steps down and place them where they will be visible every day.
3. Give yourself a cushion
Life is unpredictable, so it is important to create a plan to direct money toward an emergency fund. Having at least three to six months set aside can help you weather adverse financial conditions.
Have you struggled to save in the past? If so, consider setting up auto drafts to have money automatically withdrawn from your checking account and into a savings account that houses your emergency fund.
4. Free yourself from debt
Some debts are difficult to avoid, and may actually be worthwhile if they fund important ventures, such as a mortgage or a student loan that furthers your education.
However, you should work to eliminate or avoid most other debts, such as credit card debt. List such debts from those with the highest interest rates to those with the lowest. Then, pay off the most costly debts first.
5. Stick to your system
Finally -- and most importantly -- stick to the system you have created for your finances.
Remember, your system does not have to be complicated, but you should have a plan that tells you when your bills are due, and allows you to locate your important financial documents.
A good system will tell you at a glance whether you are living within your means.
Kemberley Washington is a professor at Dillard University in New Orleans and a certified public accountant. Follow her on Twitter at @kemwashcpa.