You might be familiar with the term “smart money”. What kind of images does this statement stir in your mind when you hear it? Probably someone who has an extensive history of making only the most appropriate and wise decisions with their finances throughout life, right? While this is true, there is no reason that someone who might not have always been the best with their cash can’t master the “smart money” game. Here are 4 tips to help you put your money genius caps on!
1) Begin with a Budget
Yes, it does seem like an incredibly obvious tip to verbalize, but you would be surprised how many people never make it to the action phase of a budget creation ideal. Even fewer actually stick with the budget when created. A recent Federal Reserve release stated that only 53% of people surveyed would be able to cover a hypothetical emergency bill exceeding $400 without having to turn to outside sources. This is why it’s important to discuss.
Think of a budget as a road map to your financial future. Overwhelming? For sure. That’s probably one of the main reasons it can be pushed aside by people so easily. Start small, take it in pieces. Get in the habit of planning out expenses you know you will accrue in a month like gas, groceries, phone bill, etc. This will put into clear terms a minimum of what you can expect to have leaving your bank account each month, and will help you be more reasonable when determining what you can “splurge” on at any given time.
2) Savings Savvy
This tip builds upon the foundation laid by your budget. Once you have a good system in place for regular spending, you can begin to get an idea of how much can be set aside for savings.
Savings can be split into two types of categories: emergency fund and “fun” fund. You want to make sure that the emergency fund is well stocked first, since this money will be put into effect when unforeseen events occur. No one likes thinking about them, let alone planning for them, but it is a risk you cannot afford to take. The “fun” fund is like your rainy day savings. If a special event occurs that you want to go big with, this is where you can get that extra cash without throwing a wrench into the well-thought-out budget.
This is not an easy process to do. You may want to think about seeking financial advice to get you on the right track. The important thing to remember is that handling your money is not a perfect science, and there will be times that you make a mistake. That is okay! Don’t be too hard on yourself. If you are feeling totally lost, seek out some professional financial advice. Who knows, something you’re told could be your “light-bulb” moment in your savings planning brain.
3) Dress to Invest
Have your money work as hard for you as you are working to obtain it. Invested money is smart money, meaning it has potential to bring you more money instead of staying in its current condition. There is no reason to have money sitting idle in your account, have your extra dollars and cents make more sense with some smart money investing!
Consider a retirement account. We know, it’s hard to think that far ahead, but keeping the idea of investing consistently in a retirement account is a wise choice for your financial future. Check out some information about the difference between a Roth and traditional IRA.
Sounds like pretty smart money to us.
4) Credit Card Consistency
A tried and true tip that should always be included when thinking about smart money is paying credit card bills on time. This is something that, when done consistently, not only helps you stay on track with your budgeting but can help your credit score. Try paying off your credit cards each week, or twice a month, instead of once a month as required. This will hold you extra accountable for your spending habits and keep you aware of your daily activity to help you budget more effectively.
Become even more of a smart money manager and see our top credit card offers to begin on your journey!
