5 Easy Money Moves to Better Control Your Finances and Reduce Debt

Managing money well is about maximizing what you have. You can reduce financial stress by focusing on the money issues that are within your control and use your funds to help accomplish your goals.

Money management might sound simple, but doing it well takes discipline. With a solid financial plan, it’s easier to avoid patterns of overspending and piling up debt, while building savings.

In a recent survey of more than 1,500 Growth Savings customers, 61% said they manage their money very well or extremely well. To get to that point, they’ve worked to develop financial systems and habits that allow them to take control of their money and make it work for them. Here’s a look at five of those important steps that can help anyone get started on a positive financial path.

Building a budget is a vital first step toward taking control of finances. A budget is basically a plan for spending your money, and having a plan in place ensures that you’ll have enough money for the things you need and some of the things you want, while building savings for future goals.

For Chelsea H., a Growth Savings customer, “creating a budget that is managed often” is a key to successful money management.

To start, add up all your monthly income and add up your monthly expenses. Subtract your expenses from your income. The difference will be the starting point for your budget. With anything left over, you can make plans for paying down debt and building savings. Your budget can be tweaked and adjusted regularly, like when you eliminate or add a monthly expense.

When you have a budget in place, it’s important to regularly track spending to make sure you’re sticking to your plan. When asked which habits make them feel proud of how they manage money in a recent customer survey, 71% of Growth Savings customers said responsible spending. That means “spending less than I earn,” says William K., a Growth Savings customer.

You can easily track spending by tracking transaction activity in online banking or by using a budgeting app or spreadsheet. It can be helpful to separate expenses into categories so you can see exactly where your money is going and where you may be spending too much.

Taking control of your finances means paying yourself first by building up savings for future needs. Take time to determine your financial goals and start saving toward them.

There are various savings vehicles available to help you reach your goals. Among respondents to Forbright Bank’s customer survey, 92% said opening a high-yield savings account is a financial action that has made them feel proud of how they manage their money.

You can save even more by setting up automated recurring deposits to your savings. For example, with Growth Savings, it’s easy to create recurring deposits weekly, bi-weekly, monthly, or at whatever frequency works for you.

Seventy percent of survey respondents say building an emergency fund is a financial habit they can be proud of. An emergency fund is a secure source of cash for unexpected expenses, such as car repairs, the loss of stable income, or surprise medical bills.

When you have an emergency fund in place, you won’t have to turn to credit cards or other forms of debt when you face an unexpected expense.

A common rule of thumb is to save enough to cover three to six months’ worth of expenses in your emergency fund. But it’s ok to start with a more manageable goal. Recent research shows that people who have just $2,000 in emergency savings report a 21% increase in financial well-being.

Having an emergency fund may help you avoid taking on unnecessary debt, but if you have existing debt, it’s important to have a plan to pay it down. For 80% of our survey respondents, making timely debt payments is a financial habit that makes them proud.

By making on-time payments on an installment loan, such as a mortgage or auto loan, you will be able to repay the debt within the agreed upon term. If you have revolving loans, such as credit card debt, you may need to develop a plan for paying more than the minimum monthly payment to avoid high interest charges and a lengthy payoff.

One way of managing debt wisely is to use credit cards without carrying a balance from month to month. For example, Growth Savings customer Heidi N. says she’s proud of “paying off credit cards each month while earning cash back,” and Caitlin P. says she is “using credit wisely and to my benefit.”

When you start making these moves, you may begin to gain more control over your finances and potentially improve your ability to make your money work for you

Disclaimer: This article is for general information and education only. It should not be considered financial or tax advice.