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How would you grade yourself on your money habits? Would you go to the head of the class or end up with an incomplete? If you’d like to take some smart steps toward a better financial future, take this advice from the Pennsylvania Institute of Certified Public Accountants (PICPA).

Focus on the positive

Cutting back on spending may feel like a punishment, so from the beginning try to remember the many benefits the effort offers. For example, you’re more likely to end each month with a little extra money that you can put toward something special, such as a vacation or new car. If you’ve been living off credit cards, getting your spending in check can help you lower your balances and the amount of interest that’s being drained from your pocket each month. Remind yourself of all you’ll gain, and the cutbacks won’t seem too bad.

Pay with cash

It’s hard to overspend when you use cash for all of your daily needs. For one thing, it will prevent you from putting more than you intended on a credit card through overindulgence. If this strategy is going to work, of course, it’s important to budget how much money you’ll carry with you each day and avoid dipping into an ATM when you run out of cash.

Pay as much as you can

Don’t stick to the minimum 1 percent to 3 percent of your balance that many credit cards require you to pay each month. Instead, pay down your outstanding balances as quickly as possible to avoid running up months or years of interest payments. Look at it this way: Having a balance costs you money, so do whatever you can to get rid of it.

Pay on time

Late penalties are another unnecessary cost that you can avoid by tackling your bills promptly. Missing payment due dates can also lower your credit score, which could force you to pay higher interest on all your borrowings.

Keep Track

The best way to monitor and better understand your spending habits and needs is to write down everything you spend for a month. You may be in for some surprises about where your money is going, but the exercise will help you address bad habits. By tracking your expenses, you may find that takeout dining or happy hours are costing a lot more than you thought. With an accurate breakdown, you can better decide how and where to trim expenses that are draining your bank account.

Don’t go cold turkey

Even as you become more budget conscious, don’t deprive yourself of fun entirely. Go out once a week instead of several times. Or maybe limit that special (but pricey) takeout coffee you love to only on Fridays as a way to celebrate the end of the week. If you deny yourself all indulgences, there’s a better chance your good money management could go off track.

Don’t forget about saving

Are you putting off saving until you’ve got extra money to spend? It’s a better idea to include an amount for savings in your budget each month. Start small, if necessary. Your money will grow slowly but surely over time, and you will have an emergency fund if needed or the cash available for a dream goal.

Live within your means

If you start out with a budget that includes your monthly income and expenses, it will be easy to see how much extra you have to spend.

Consult your CPA

Trying to change your financial habits? Your CPA can offer expert advice and steps that will improve your outlook. Turn to him or her with your questions. To find a CPA in your area or for more financial tips, visit http://www.picpa.org/moneyandlife.

 

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