Since you most likely work hard for your money, it’s important that you are also smart with money in order to hold on to it and put it to work so that it helps you achieve your financial goals.
Here are some signs that you are smart with money.
You Have a Budget
If you are smart with money, you have a plan written down to decide how you will spend your money each month. You know that without a plan, you might run out of money before your next paycheck or before your next invoice is paid.
Over the long term, those who budget effectively will have manageable debt, room to indulge occasionally, and savings to pay irregular or unexpected expenses and retire comfortably.
You Keep Your Financial Goals in Mind
People who are smart with money have short-term, midterm, and long-term financial goals. These goals may range from paying off a credit card to retire by a certain age or saving enough to start a business. Whatever your goals are, if you’ve always got them in mind, it’s easier to ignore unnecessary expenses like impulse purchases that may take you off your path.
You Leverage Credit Wisely
There are many ways to leverage credit to create wealth. However, wealth creation via credit only occurs when the item purchased is an asset that puts money in your account on a regular basis, and continues to gain value that exceeds the interest you are paying on it.
You Avoid Unnecessary Fees
Although fees related to banking and financial services are almost impossible to avoid, there are some that you should never have to pay. Being smart with your money means understanding the financial products you are using.
With your bank, you avoid being charged unnecessary monthly fees and fees for insufficient funds or bounced payments. With your credit card, you avoid paying late fees. Even with services such as PayPal, you use the free “family and friends” option to avoid their transaction fee.
You Shop for Necessities with a Plan
Raise your hand if you have ever walked into a store for a few items and walked out with three times as much as you originally planned to get. I’ve been there too. Failing to plan means planning to fail. That’s why I now create a list beforehand and stick to it (most of the time). Whether you are shopping for your home or your business, it’s smart to do so with a list that has your budget in mind.
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