Money takes up a great deal of room in our minds and lives. We think about how much of it we have, what we need to do with it, how we can get more, and what we would do if we had more. Many people also think about how they could be much better at managing it. While everyone has the potential to be better at money management, here are some signs that indicate that you’re better at it than you might think:
You Have Financial Goals
Once you learn how to set your financial goals, you’ll be much better with your money than you think you are. Having short-, medium-, and long-term goals gives you direction and helps you build discipline.
Regardless of their financial situation, anyone can set goals such as paying off credit card debt, building a $1,000 emergency fund, and saving for a down payment on a car or home. Once you achieve each financial goal, you can work toward an even bigger one.
You Have an Emergency Fund
You are certainly better with money than you think if you have an emergency fund set aside to cover unexpected costs, such as car repairs, home maintenance, or time off work. According to the most recent reports, you’re in the minority.
A report cited by the City of London noted that nearly one in four UK employees (24%) have no emergency savings, and that 27% of higher earners are financially stressed. While starting an emergency fund as a low earner can be hard, actionable steps create momentum.
- Round up your everyday purchases to the dollar and deposit the difference into a savings account.
- Start with micro transfers of $2 to $5 on payday to build the habit of saving.
- Cut one temporary expense every pay cycle and move that amount into your savings account.
You Aren’t Tied Down to Your Credit Card Balance
There are many benefits associated with having a credit card, such as financial perks, fraud protection, and opportunities to build credit. However, many people find themselves in an endless cycle of not being able to pay off their entire monthly balance and being charged high-interest fees. A sign of good money management is spending only what you can afford to pay off each month and maintaining a zero-dollar balance at the end of each month.
You Don’t Spend More Than You Earn
The worrying reality is that many British adults are now spending more than they earn. While a higher cost of living undoubtedly contributes to this reality, some people are simply not tracking their spending to know when they’ll come up short at the end of their pay cycle. If you regularly track your spending and have a buffer or break even at the end of your pay cycle, you’re doing well.
You Could Survive On Your Savings
One in three adults wouldn’t be able to live off their savings for more than a month if they lost their income, according to a UK Savings Week report. If you were let go from your job and could sustain yourself for at least a month or possibly longer, you’re in a much better position than many other UK earners.
It’s easy to feel down about your financial situation if you’re not where you want to be. However, if you have financial goals, savings, and spend within your means, you’re more financially secure and responsible than you think.
