Even though we celebrated St. Patrick’s Day this past Monday, it is never too late to work on keeping your finances “in the green.” Some of us are all too familiar with the term “in the red” when it comes to our finances; nevertheless, some problems can be fixed by making minor or sometimes major adjustments.
Going “green” can often mean changing some familiar habits that we have developed over the years, or it could mean adding new steps or processes to handle our finances better. Let’s take a look at some steps that one might take to keep your finances “in the green.”
Charlestien Harris
Reconciling your bank account. Reconciling your bank account is essential if you are going to ensure the accuracy of your financial records, find any potential errors or fraud, and maintain a clear picture of your cash flow and financial health. By understanding your actual cash flow, you can make better financial decisions and avoid overspending or overdraft fees. If you find discrepancies, reconciliation allows you to quickly identify the source of the problem and take action, such as contacting your bank or resolving a dispute. Reconciled accounts provide a more precise picture of your financial situation, which is necessary for sound financial planning and decision-making.
Make “autopay” a regular habit! If you’re still relying on your memory, a calendar, or a phone alarm to remind you to pay your rent, credit card bill, or other monthly expenses, then maybe it’s time to at least consider setting those accounts that you can on autopay. Not only can it reduce the chances of you missing any payments, but it can also save you some much-needed “green” by helping you avoid paying late fees. It can also allow you to focus on other important tasks that may need your attention. Learning to use the available technology can often save you time as well as money, and I know we have heard that adage that says, “Time is money!”
Try to work on reducing your debt. This tip can often provide extra “green” to possibly start your emergency fund or pay a bill that is currently due. If you can steadily manage your debt, you can often strengthen your personal finances and take more control of your financial future. Always remember that not all debts are equal, and knowing what kind of debts you have is important. For example, home mortgages and school loans may reduce your taxes and possibly increase your refund if you are due one. The money you save by reducing your debt can also be allocated to other areas of your budget that may need your attention.
Begin to make more “cash” purchases. By using cash instead of credit, you can reduce the amount of money you spend on paying interest on that purchase. This step can also increase the amount of cash you have available to jumpstart your savings plan or increase your contribution to a retirement fund or 529 plan for your kids’ or grandkids’ education needs. Sometimes it is just good to get back to the basics when using cash used to be more prevalent than it is now. Handling physical cash can make you more aware of your spending habits and how much money you have available, leading to more mindful purchases. Also, using cash helps avoid accumulating debt, as you are spending money you already have now, rather than borrowing it to pay back later. Another great reason to use cash is that it reduces the risk of identity theft. Cash transactions don’t involve card information or passwords that can be compromised.
Using cash makes it easier to follow a budget. Cash can help you stick to a budget. Thus, the envelope method of budgeting comes in. If you commit to spending a fixed amount per week, it may be easier to stay within your limit by withdrawing that amount in cash from the designated envelope and only paying with it. Swiping a credit card (or even a debit card) is easy, and it may make you “numb” to your spending habits. But withdrawing and handling physical cash can make you more aware of your spending and how much cash is in your checking account or savings account.
Paying with cash can encourage mindful spending and budgeting habits. It may be inconvenient at times, but some of the benefits can far outweigh the consequences of using various other methods of making purchases. Some people may feel that counting and handling actual cash makes them appreciate their savings more and are less likely to overspend. All in all, the choice is yours when it comes to deciding whether to use cash or credit.
For more information on this and other financial topics, you can email me at Charlestien.Harris@banksouthern.com or call me at 662-624-5776.
Until next week – stay financially fit!
Charlestien Harris is our financial contributor, a financial expert with Southern Bancorp Community Partners whose articles are seen in a number of publications around the region.
