20 Ways to Stop Myself from Returning to Old Patterns of Paying Bills
Once you have improved your financial situation, you need to maintain your new way of paying your bills. Here are 20 ways to help you keep your finances healthy.
1. Education: The Key to Maintaining Financial Success
You’ve got a handle on your debt. You’re working to raise your credit score. You’re setting goals for the future. It’s time to take the next step, but what? First, you need to get rid of old habits for good and make new ones, but how? Education is the key. You’ll find plenty of good books on personal finance that can teach you everything from getting out of debt to learning how to make sound investments.
Next, develop the habit of saving money—another way to ensure financial success. Emergencies happen, but if you have money saved, you won’t be tempted to use credit cards that can plunge you back into debt.
2. Create a Realistic Budget
Savings should be part of your monthly budget, but you need to be realistic. A budget is a plan you devise to manage your income and expenses. It helps you to see how much money is left for extras—after you pay your bills and take care of other essentials, such as food, gas or bus fare, and medical care. How much you save each month depends on how much money is left. Even if it’s just a little bit, always remember to “pay yourself first.”
3. Income vs. Expenses: Lowering Your Monthly Bills
Financial success depends on maintaining a budget that provides positive cash flow. To make that work, your income must be higher than your outgo. You may be unable to reduce fixed expenses, such as rent or mortgage, loan payments, or insurance. However, you can cut back on variable expenses like clothing, entertainment or daily trips to Starbucks.
4. Reduce Your Cable Bill
One of the most expensive monthly bills is cable service. Don’t need Internet service? Cut the cable. But if you require Internet access for work or school, you still need cable, dish, or another WIFI service. Just want to watch television? You can lower your bill by paying just for basic cable, while enjoying a wide selection of entertainment from lower cost streaming services such as Netflix, Hulu, Fubo, and others. Some streaming services also offer live TV with many more channels at no or low cost. If streaming isn’t for you, you’ll still save money by prioritizing and reducing the number of channels in your subscription.
5. Get into the Habit of Eating at Home
Eating out and ordering delivery from restaurants is one of the most expensive habits you can develop. This includes buying lunch at work each day. While it’s nice to enjoy an occasional meal out, you’ll save a lot of money by cooking and eating at home. Don’t like sandwiches for lunch? If there’s a microwave at work, bring leftovers from home. Even prepackaged meals from the grocery store are generally less expensive than buying restaurant food every day. Develop a habit of buying lunch only once a month or on special occasions.
6. Create a Monthly or Weekly Meal Plan
Plan a weekly or monthly menu to save time when cooking your meals at home. A menu plan eliminates the “what are we having for dinner?” stress. It also allows you to prepare meals ahead of time that you cook or reheat later. Preparing meals ahead cuts down on prep time, especially if you do it on your days off. That way, everything is ready for the oven or microwave when you come home at the end of the day. You save money because you only buy what you need according to the meal plan.
7. Develop a Plan to Reduce Your Debt
Carrying a substantial amount of debt negatively impacts your financial health. This is especially true if you have big balances on high-interest credit cards. Begin your plan by making a list of all your debt and how much you owe to avoid delinquency. Because making only minimum payments takes much longer to get you out of debt, you need to find a way to repay it as quickly as possible.
You might try negotiating with credit card issuers for lower interest rates, getting a debt consolidation loan, or obtaining a balance transfer credit card with a lower interest rate than your current one. Once that’s done, you must concentrate on keeping spending habits that will enable you to pay off your debts more quickly.
8. Avoid Using Credit Cards
Many people struggling to make their monthly payments turn to using credit cards. Using your cards to stretch your paycheck can easily and quickly land you in debt. You may find it difficult, or nearly impossible, to pay your monthly bills, save any money toward retirement, or reach any of your financial goals. Avoid using credit cards by putting money into a savings account for funding large purchases, car repairs or other unexpected expenses. Leaving your credit cards at home eliminates the temptation to use them. Instead, when you shop, pay with cash or a debit card.
9. Include Student Loans in Your Budget
Student loans can strap you for many years if you have no plan to pay them off. Whether you have one loan or several, you must create a plan to repay your debt. Sometimes, consolidating your student loans will help to lower the payments, making it easier to fit your budget. Numerous offers are available and many advertise minimal interest rates. Student loans continue to accrue interest even before repayment becomes due. The sooner you start making payments, the sooner you can pay it off.
10. Put Money into Savings Every Paycheck
Make a habit of adding money to your savings account each time you get paid, whether a paycheck or a bonus. This simple step can greatly benefit your financial success. Savings help you manage your money and build wealth. They are also a nest egg for emergencies like replacing an appliance, or expensive car repairs.
The old you might pull out a credit card or go to the bank for a loan. The new, more responsible you has saved money every paycheck, so you will have all or most of the money for emergencies when the time comes. Just by depositing the money you save eating at home or bringing your lunch helps. You’ll be surprised how quickly those little deposits add up.
11. Try A Spending Fast
Don’t let extra cash burn a hole in your pocket. Just because you have it doesn’t mean you have to spend it. The length of your spending fast is up to you. During this time, commit to spending only on necessities, saving money, and assessing your spending habits. You may find you can very easily live without some of these “necessities.”
Remember, emergencies generally happen without warning, especially if you own a home or a car. Be prepared to deal with them by saving your money beforehand.
12. Create a Financial Plan
Financial planning is vital to financial success. While similar to a budget, it covers a much longer period. When you create a financial plan, you choose the goals for reaching specific milestones. For example, you may set a goal to pay off your house in the next 15 years, or even to be completely debt-free when you retire in 25 years. Whatever the reason, a financial plan will help you achieve your goals within your timeframe.
13. Set Realistic Goals and Investments
Be realistic about setting your goals for your future. If you just bought a house, setting a goal to pay it off in five years is probably unrealistic. You might instead set a goal to pay an additional amount each month to pay down the principal and lower the balance. How realistic is your plan to retire by the age of 50? Can you meet that goal without changing your entire lifestyle and that of your family? Set reasonable goals that will allow you to achieve your objective.
Unrealistic goal setting can put a big crimp in your motivation. Failing to achieve an unrealistic goal can cause you frustration and may tempt you to give up. Your plan must be flexible enough to accommodate possible changes. Perhaps you set a goal to buy a new car in two years, but you become injured at work and are now on disability. You need to readjust your goals to your new circumstances, whether temporary or permanent.
Once you set goals, examine them frequently to assess your progress. How far have you come? Does your timeline need rearranging? Have things changed enough to make your original goals unrealistic now? These are questions to ask yourself on a routine basis.
14. Automatic Bill Pay and Other Financial Tools
An excellent tool to help you avoid late or missing payments, automatic bill takes the guesswork out of paying your bills. Creditors get paid on or before the due date, so you never miss a payment. Not all creditors offer an option for automatic payments, but most banks do. Enrolling in online banking provides access to:
- Payment reminders
- Balance information
- Check ordering
- Spending reports
When you sign up for bill pay through your bank, take time to add categories in the app. You can then generate reports to track your spending activity in different areas. Are you spending money on unnecessary items? Are your utility bills too high? Is your food budget on track? Seeing these numbers in black and white gives you a clear picture of your finances. In general, online banking apps can help you control your spending and reduce other expenses.
15. Avoid the Temptation to Dip into Savings
Saving money every paycheck certainly helps to accomplish your financial goals. However, the temptation to dip into savings for nonessential purchases can sabotage your plan and leave you without resources for an emergency. To prevent raiding your savings for any unnecessary spending, make that money difficult to access. Here are five ways to do this:
- Place the money into CDs.
- Move the money from a brick-and-mortar bank to an online bank where funds are less readily available.
- Place the money into a different account at another bank.
- Keep your checking and savings accounts completely separate.
16. Add to Your Retirement Funds with a 401(k) Plan
Reasons to save money extend beyond your current financial needs. At some point, you’ll want to retire. Unless you have enough saved, you could run short of funds, because pension or other retirement accounts often pay less than your previous salary. Even if your company has a regular pension plan to which they contribute, it’s in your best interest to begin investing in a 401(k) plan at your earliest opportunity. For singles and family breadwinners, a 401(k) plan is especially important as retirement looms.
Investing in a 401(k) plan not only gives you peace of mind for your future, but also gets you a break on your taxable income. Although some employers may contribute to 401(k) accounts in varying amounts, many do not contribute at all. Even so, a robust 401(k) plan can provide additional income for your retirement years.
17. Locate Additional Sources of Income
People sometimes have trouble making their monthly payments because they spend more than they make. Even when sticking to your budget and only spending money on essentials, you may need to find a way to generate more income. You might look for a job that pays higher wages or take a second job. Perhaps you could turn a hobby into a home business, or start a business you can conduct after working hours. Higher income provides greater financial security.
If changing jobs is not an option, you can still generate additional income on the side. Possibilities include multi-level marketing opportunities like Amway, Avon, Mary K Cosmetics, and Herbalife, to name just a few. Investing in rental properties if you have available funds can also be profitable—rental homes are always in demand.
18. Build Additional Skills
Acquiring additional job skills often leads to greater earning power. You may need to go back to school to learn the skills required to stay competitive in today’s job market. The more educated you become, the better your chances of finding jobs in higher-paying fields. Even without leaving your job, your company may pay you more if you have advanced education. A degree or certificate often means higher pay for the same level of experience.
19. Protect Your Finances with Insurance
The right type of insurance will protect your finances. The more common types of insurance to consider are:
- Auto insurance
- Auto insurance is required in all but two states, New Hampshire and Virginia. Most states call for a minimum of liability insurance, although some require additional coverage.
- Life insurance
- Life insurance can give peace of mind to loved ones and assure that expenses for funerals and outstanding debts will be covered in the event of death.
- Health insurance
- Health care is very expensive. Insurance protects you from catastrophic medical bills and lowers the cost of routine care.
- Renter’s or homeowner’s insurance
- Homeowner’s insurance is necessary to get a mortgage, and many apartments now require renter’s insurance. Both will compensate you for loss or damage to your property or belongings under a variety of circumstances.
- Flood, hurricane, or tornado insurance
- If you live in an area prone to severe weather and flooding, you should consider adding these policies that are generally not included in homeowner’s coverage.
- Home warranty
- Lastly, home warranties, though not actually insurance, usually cover a home’s appliances and systems and can save you money in the long run.
20. Take Advantage of Employee Benefits
Some of the above expenses may be offset by employee benefits. While health insurance costs have risen in recent years, many employers still offer some type of plan. In today’s market, employers may offer flexible spending accounts, a way for employees to pay for a variety of expenses including health care, dental procedures, eye care, and daycare. If you do not have health insurance coverage through your employer, you may find reasonably priced policies through the Affordable Care Act marketplace.
You may think you cannot afford the additional cost, but insurance is designed to protect you from paying more out of pocket for repairs, health crises, and other events. Always evaluate your options and choose those offering the best benefits for you and your financial health. Before you decide, ask yourself what you would do if something happened—if you had no insurance. Choosing the proper insurance is an integral part of protecting your financial future.
Make a Plan and Stick with It
Make a habit of following these 20 steps toward financial stability and stick with them to reach your goals. You’ll have better credit, more money, and less stress. Start now towards your new, secure financial future.
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