When was the last time you checked how much money is in your bank account? Knowledge is power when it comes to managing your funds, but it seems checking in with your finances is a scary business. According to Lexington Law, only 36 percent of Americans check their bank balance on a daily basis.
From becoming best friends with your online banking app to cutting back on subscriptions and creating a realistic budget, here is how to have a better relationship with your bank balance.
Understand your relationship with money
Our relationship with money is inherently emotional and often instilled in us from a young age.
“As we grow up we watch and learn how our parents and friends interact with money — both the good and the bad. However, we need to develop our own healthy relationship with money,” says Erica Wolfe-Murray, a business and life coach. Wolfe-Murray suggests keeping a month-long money diary to assess where your relationship is currently at. “By tracking what you spend, how and where you spend it, and what triggered these purchases, you will get a clear picture of your relationship with money and changes that may need to be made.”
Only 36 percent of Americans check their bank balance on a daily basis.
Worrying about money can eat away at your attention and sense of well-being, but it doesn’t need to. “Facing the ups and downs of managing it puts you in the driving seat,” says Wolfe-Murray. Regularly looking at your bank balance, tracking spending and having a budget will all help. “Make sure to open your post and not put off reading any bills. It is vital to tackle any potential issues early on before they become more of a problem,” says Paul Day, senior support officer for CABA, a financial wellbeing charity.
Become acquainted with your bank balance
While a detailed monthly spending diary is an excellent way to face your spending head-on, moving forward, it is important to check in on your spending as often as possible. Day advocates installing a weekly money assessment ritual. “Try to pick a time each week where you can sit down and look at your money and bills in detail,” he suggests. Quick daily check-ins are helpful too and thanks to online banking and mobile banking apps, this couldn’t be easier. You can even set up daily balance reminders with your bank or create push notifications for when you reach a certain amount.
Create a realistic budget
No one enjoys budgeting, but working out your ingoings and outgoings is key if you want to feel in control of your finances. “Work out your monthly household income (including wages, tax rebates and contribution by others who live with you) and regular monthly outgoings (every bill you need to pay, including utility bills, child support, pension contributions and living costs such as food, travel and any debt or loan repayments),” Day says. “Only by knowing exactly what is coming in and what is going out will you be able to budget effectively.” Once you have worked out what is left over after you have taken away the regular outgoings from the regular incomings, you know how much money is roughly left for saving or spending.
Prioritize bills
The number of outgoings can feel overwhelming at times, so Day advises prioritizing based on what the end result of non-payment might be. “If your rent or mortgage payment remains unpaid, you could potentially lose your home. Likewise, your gas and electricity can be disconnected if you don’t pay these bills. These items should, therefore, be treated as essential and prioritized above everything else,” Day recommends. One way to ensure priority payments get paid is by setting up a standing order for the total amount of bills each month to be transferred to a separate bank account on the day your salary comes in. “This will ensure you always have the money you need to pay your bills, without the temptation to spend it. And if you are freelance, tuck away a percentage of every invoice as soon as it is paid to go towards your taxes,” Wolfe-Murray recommends.
Save smart
If you are in a position to save, even a very small amount, it is very helpful to do so. “For short term savings, you should be looking at online accounts as they can pay a slightly better interest rate. The longer you put the money away for, the better the rate of interest,” advises Sam Jennings, a financial planner. If you have a larger amount of money, it is worth investing more carefully. “Try a tax-efficient investment fund to help it grow over the medium to long-term,” he adds.
Also, you could consider trying an app that automatically saves your spare change for you. For example, apps like Acorns and Chime round up purchases to the nearest dollar and either save or invest the difference for you.
Consider credit carefully
While credit cards can be useful for bigger purchases, think carefully about how much you use them. Jennings encourages clients to turn to credit only when it is totally necessary, and instead of using cash or debit cards. “Make sure you get your head around the fact that buying things on a credit card isn’t using your own money,” he says. “You are effectively borrowing money to purchase those goods, and you will have to pay that money back, often with interest.”
Skip services
Do you really need to be signed up to three streaming services? Is your gym membership getting good use? How often do you read that magazine you subscribe too? Take a good hard look at the regular costs you have committed to and consider what can be cut.
Shop around
Make sure you are paying the best possible prices for utilities. “Shop around using comparison sites for payments like car insurance, phone contracts and broadband,” Day highlights. Plus, get organized and ensure you book travel trips in advance. “Avoid train price premiums by booking as soon as you have chosen to take the trip. With flying, try and be flexible with dates. Wednesdays tend to offer the most savings while Saturdays are often the priciest,” Day says. Saying no to shopping can take serious restraint but it is crucial if you want to stay in the green. “Stick to the price you are willing to pay, don’t let emotions come into it or be blinded by the people trying to sell it to you,” Jennings suggests. “Remember the pre-planned budget you have already established and stick to it.”
