by Mary Thorson
“Do these two things and become independently wealth by next week!” “Eat this one substance and lose 25 pounds of belly fat!” Too good to be true? Of course!
Meaningful financial management is much like weight management; slow and steady wins the race. But banks don’t want you to be slow and steady. Instead, they want you to be financially gluttonous and splurge until your entire like is nothing short of a complete mess.
As mundane as it may seem, take these challenges in 2014 to end the year feeling good about your bank account.
- Keep track of spending. We are so inundated day-to-day with multi-tasking and to-do lists, it is easy to lose track of spending. Most of us would not remember at bedtime what we spent for lunch that day. With mobile apps and programs to record information real time, keeping track of spending is easier than ever.
- Cash in = cash out, a balancing act. Do you know how spending stacks up against income, or, do you just blindly transfer funds from savings to checking each month to cover your credit card payments? Sit down with records of all cash expenditures and credit card charges for a month of transactions and compare it to all incoming funds for the same period. With those results in hand, consider where you can make changes easily. How can ATM or bank account fees be eliminated or reduced? How can you eliminate late fees? Are you using the best (most cost effective) plans for cable, cell phone, and other services?
Apply for and use only the credit you need. Credit has costs that cash transactions do not have. If you pay the balances in full each month, look closely at annual fees or other costs that may be associated with your credit accounts. Also, creditors and others evaluate risk from the credit accounts that you have used, their balances, and payment histories on your credit report, but, they also evaluate the “credit available.” Credit available is open accounts with approved credit limits for which there may be no balance at the time. Each one represents another potential debt. The more activity shown on your credit report, the more credit may cost in the way of higher interest rates and fees.