scheduling

5 Good Money Management Habits You Already Have

Dan Rafter — Thu, 18 Feb 2016 11:00:04 +0000

If you're struggling to save or pay down debt, you might think it's because you're no good with money. But the truth is, plenty of the good habits you practice in other areas of your daily life can also help you build an emergency fund, pay down your credit card debt, and stick to a monthly budget. You just need to apply the good habits that you already have to money management.

Here is a look at the five good money management habits that you might be surprised to learn you already have.

1. The Household Schedule

You know that you should build an emergency fund of savings, stashing away enough dollars to cover at least six months of daily living expenses. That way, if you lose your job or if your furnace suddenly goes on the fritz, you won't have to turn to your credit cards to survive. But you just can't seem to find enough money at the end of every month to build that emergency fund.

Here's the trick, though: If you already manage to schedule all of your household activities — everything from getting your children to their sporting events on time to mapping out exactly which of your teens needs access to a car at which hour of the day — you should also be able to create a household budget. You already have a knack for scheduling. Instead of scheduling the activities of your family members, schedule where the money you spend each month is going.

Creating a budget might even be easier than juggling your family's activities. Write down how much money comes into your household each month. Then write down fixed expenses such as mortgage and car loan payments. Add monthly payments that fluctuate, such as utilities, groceries, and entertainment. Once you have this charted, you'll know exactly how much money you should have leftover each month. Then you'll know how many dollars you can earmark for building your emergency fund.

2. The Willpower

Creating a budget is a good first step. Sticking to it is key. You might not think you have the willpower to do so, but if you can force yourself to go to the gym or take a run five times a week, why can't you force yourself to only spend the $400 you've allotted to eating out and entertainment in your monthly household budget?

The discipline it takes to stick to an exercise program or healthy diet is the same discipline you need to only spend what you plan to each month. If you can do one, you can do the other. You just need to apply the same focus to staying financially healthy as you do to remaining physically healthy.

3. Tracking

Do you track the calories you consume each day, whether with an old-fashioned pen and notebook or with the help of an app on your smartphone? Then you should be able to do the same with your dollars.

One secret to creating and sticking to a realistic household budget is to create a spending book. In this book — which can be as simple as a notebook or as high-tech as an app — you write down every dollar you spend, at least for a month. This will give you an idea of where you are spending your money, which helps you create a household budget that is realistic. This will provide you with the motivation you need to tweak your spending patterns.

4. Skipping the Doughnuts

Your coworkers love their sweets. Every morning, one of them brings in a box of doughnuts or a tray of chocolate chip cookies. But you're good – usually. You pass right by those doughnuts and pop open that container of low-fat yogurt.

Now, apply that same discipline to your finances. Sure, putting that super-deluxe flat screen TV on your credit card would provide a jolt of immediate gratification. But you'll regret it later when you open your credit card statement. Instead, pass on the easy pleasure and buy that TV only when you've saved enough to pay for it in cash.

5. Dumping the Clutter

You have the neatest house on the block. You spend every weekend toting a trunk full of unused toys, clothes, and tools to your local Goodwill or Salvation Army. You hate clutter and love the airy basements, living rooms, and kitchens that you get when you don't have a home filled with too much stuff.

Your finances can have clutter, too. It's called credit card debt. Credit card debt is one of the worst forms of debt you can have because it comes with such high interest rates. If you don't pay it off each month, it will steadily grow — just like all those ignored children's toys that seem to multiply in your home's playroom. (See also: Stop Paying Interest on Credit Card Debt With a Balance Transfer)

It's time to declutter your finances. Pay a little bit more each month to pay down the principal balances on your credit cards. Consider it to be the financial equivalent of donating those unread books cluttering your bookshelves.

What good money habits do you already follow?

This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How often do you get your paycheck?

Philip Brewer — Tue, 15 Jan 2008 17:37:23 +0000

One of the BlogHer featured posts (Mrs. Micah's Credit Cards: Billing Cycles and Bimonthly Paychecks) talked about a mis-match between pay dates and credit card due dates. It reminded me of just how much I used to agonize over this issue, back before I had my finances under control.

Over the years, I've been paid on just about every paycheck schedule: weekly, biweekly, half-monthly, and monthly.

The schedules

Biweekly seems to be the most common, at least in the United States. I know a lot of people who figure that one check goes for the rent or mortgage and the other check goes for a car payment or some other major expense. The pay dates tend to shift around in the month, though. Someone who counts on, let's say, the second paycheck of the month to pay their next month's rent, can get burned if the check comes unusually early and the money gets spent before the rent check gets written. (It used to be that getting the check unusually late could also be a problem--a check that arrived the last day of the month might well not have cleared before rent was due on the first. Direct deposit and ACH has probably made that a non-issue for most people.)

Half-monthly is almost like biweekly--you still get a first and a second paycheck every month--except that you miss out on the best thing about biweekly paychecks: the two months a year when you get an "extra" paycheck, because a 52-week year means that there are 26 biweekly pay periods but only 24 half-monthly ones. If your finances are under control, there's really no difference between getting 1/24th of your annual salary twice a month or 1/26th of it every two weeks. But for a person who's living paycheck-to-paycheck, those three-paycheck months can cover all manner of careless spending.

Weekly sounds great to someone who's gotten a bit too used to saying, "Wait until we get paid and then we can buy that." In practice, though, it's kind of scary, because there are ordinary monthly expenses that can't be covered by a single paycheck. Where one biweekly paycheck will commonly cover rent or the mortgage, one weekly paycheck probably won't (unless you're living in a very cheap apartment). All of a sudden, that simple budgeting scheme (first paycheck covers the car payment, second paycheck covers next month's rent) doesn't cut it any more. All of a sudden, you're having to save and budget just to get your bills paid.

Monthly has the advantage that it's the same frequency as most of your bills. Times when I've been paid monthly, the payment typically comes a few days before the end of the month--early enough that the check had cleared in time to pay the rent on the first. In my experience, it was actually better than weekly. With monthly you have to budget, but at least you have the whole month's money in one big lump.

Personal history

I got paid biweekly at my first full-time job. Then, my second employer was an old-line industrial firm that ran a weekly payroll for all the factory workers, and found it easier to just include us software types in that payroll.

With a biweekly paycheck, my bill paying was pretty simple. I'd let bills pile up as they came in, and then I'd pay them all when I got paid. It was pretty unusual for two weeks worth of bills to come to more than one paycheck. Once I moved to weekly paychecks, though, that changed. It was perfectly ordinary for one weeks worth of bills to be more than one paycheck--it happened at least twice a month.

I think that experience was what first prompted me to get my finances under control. I cut back a bit on spending, got my credit cards paid off, let some money accumulate in my checking account. When my next job turned out to pay monthly, it was not only no big deal, it was actually kind of a relief--I didn't need to do nearly as much figuring and planning ahead. I got my money, and then I paid my bills over the course of the month. It was easy.

A matter of class

There's some degree of class distinction in pay frequencies. I don't know if it's still true, but as late as the mid-1980s, payrolls in England were strictly divided between the middle-class folks (who got paid monthly by direct deposit to their bank account) and the working-class folks (who got paid weekly by their boss handing them an envelope with actual cash money inside). Even in the US there's a general sense that the working-class folks need to get paid more often (because they can't be expected to budget wisely), with the implication that people who get paid less often must be of a higher class.

Under control

Of course, none of it matters, once your finances are under control. The money flows in whenever it flows in, it flows out when the bills are due--and the surplus goes into whatever savings or investment vehicles you've selected. A large fraction of my income is now paid either annually (mutual funds that pay dividends just once a year) or semi-annual (interest payments on treasury securities). It's all the same to me.

I remember vividly the shifts from biweekly to weekly to monthly, because they made a huge difference in the way I managed my money. Since then, I've had several different payroll schedules--biweekly, half-monthly, back to biweekly--but I scarcely remember, because it never really made a difference after that.

Of course, while you're in the process of getting your finances under control, you're likely to be especially aware of these matters. It's necessary to pay close attention to the flow of money into and out of your life, in order to get a handle on your finances. It may be of some comfort to know that, once you do, it turns out not to matter so much any more.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Scheduling Time Versus Scheduling Tasks

Philip Brewer — Tue, 30 Oct 2007 12:26:42 +0000

I never feel like I'm being as productive as I'd like. Every few years I try to do something about it, usually starting with reading a book or two on time management. Of late Getting Things Done: The Art of Stress-Free Productivity by David Allen has seemed like the book to read. I read it a year or two ago, and internalized a lot of its methodology. One thing about it, though, has never quite worked for me: I like to schedule blocks of time for certain kinds of activities.

In GTD one doesn't schedule a block of time, except for things that are actually scheduled. That is, you might schedule watching "Heros" at 8:00 CDT on Monday, because that's when it's on. Instead of scheduling a block of time to work on some project, though, you maintain a list of "next actions" for all the things you need to get done. When you're at a point where you could do something, you look on the list, select the next thing to work on, and then do that.

Now, this makes sense at many levels:

It minimizes context switches--you just work to completion in each "next action." (Of course, this depends on your "next action" being appropriately sized, but at least you're not switching to something else just because your scheduled block of time has expired.)
You're selecting the next "next action" to do, at the point when you have the maximum amount of information to use in selecting the item--how much time you have, how tired you are, what you feel like doing, whether some piece of equipment is available, etc. (Much of that information is not available hours or days earlier when you might be blocking out time on your schedule.)
If you've already decided on what the "next action" is, you're less likely to be paralyzed by having a whole project's worth of work to do and no idea where to start. (Of course you do still have to decide what the next action is, but separating the deciding from the doing seems to help some.)

Despite all that, I find there are certain kinds of activities where I'm happier blocking out chunks of time to just "work on" some project. In particular, I feel this way about working on my novel. Maybe it would be better to figure out what the "next action" should be, but I just find the whole writing process a bit too organic for me to easily plan next actions until I'm in the midst of them.

Of course, it's possible to do both. There's no reason I can't schedule a 3-hour block of time each morning to work on my novel while managing my other tasks on the basis of "next actions" (which is what I'm doing now), but I feel like I might be missing out on some productivity enhancement.

(I should mention that there's a lot more to Getting Things Done than just "next actions," and most of the rest of it works for me like a charm. If you wish you could be more productive, and aren't already familiar with GTD, check out David Allen's site and consider getting the book.)

Any Wise Bread readers out there doing the GTD thing? Any of you who also schedule blocks of time to "work on" stuff, despite the advice in GTD? Most particularly, any of you who feel the same draw to do so that I do, but have figured out some effective way to channel that inclination into "next actions" and think you're the better for it? If you've got any thoughts on the matter, I'd be pleased to read about it in the comments below.

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This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: