We all have that friend who seems to have her financial act together more than most. She’s the one who always knows down to the penny what’s in her bank account, never seems to be “waiting until pay day,” and can somehow explain to you exactly what it means to effectively diversify your investments. This type of financial mastery doesn’t happen by accident, any more than other impressive life habits! The good news is with a little bit of effort and focus, we can put these habits in place in our own lives.
Here are six things a savvy gal does on the regular to stay financially responsible.
1. Knows Her Net Worth
Your net worth is a key measure of your financial health. While it’s not the only metric that matters, it is one of the ways you can check in on your progress toward personal financial goals. A few minutes spent on this calculation every month or so can help you gain an accurate view of your overall financial picture. Are you hoping to buy a home or set yourself up well for retirement? If so, you’ll want to know that you’re gearing your savings toward the right assets, and also that debt balances aren’t eating away at the overall big picture.
Very simply, you calculate your net worth by adding up your assets and subtracting your liabilities at a single point in time. The easiest way to start is by making a list of all of the physical assets you own, as well as any financial assets (such as the money in all your bank and retirement accounts). The next step is to add up all of your debt and subtract them from your assets.
Calculators like this one can also help do the heavy lifting by providing a structured format in which to plug in numbers and guide you along the way.
2. Budgets Every Week
Budgeting is at its best as a financial tool when we do it frequently. While it can seem easiest to sit down by yourself or loved one only a couple of times a year to talk about budgeting, money savvy gals make budgeting a part of their weekly routine. Once a week, try to get in the habit of looking at your account balances, how and where your money is spent, or viewing your savings goals. It’s much easier to course correct on financial goals when you’re looking at these indicators on a routine basis.
Consider testing out whether you’re a gal who likes her cash in envelopes every week or gets into software systems like Quickbooks. There are so many different budgeting methodologies now that it’s easy to pick the best budgeting tools that work for you! At its core, budgeting is simply about knowing exactly what your income is, where it goes, and how that stacks up against your long-term saving and investing goals.
3. Keeps Her Lifestyle FOMO In Check
Girls who are smart about money are the ones who always seem to have that admirable level of self-restraint when it comes to things like not buying an extra pair of boots they don’t need. While it seems basic, little bits of lifestyle can add up over time and chip away at your overall financial security.
This can happen easily when you start to earn a little more money, so be extra conscious of it around promotions or unexpected raises! Tiny tweaks add up when trying to channel your money toward a larger goal. Take advantage of year-end credit card statements as these will often break out the various categories in which you spend money.
Getting that big picture view of where your disposable income goes can be a great reality check for making sense of what you really prioritize financially versus what you think you do.
Sadly, most of us eat it or wear it!
4. Has A Plan For Her Debt
It’s nearly impossible to get started in life debt free, so having a thoughtful plan as to how to manage debt is essential. This means potentially paying off highest interest credit cards first, or creating a plan (like the “snowball” strategy) to start with little bills and then roll those payments toward bigger debts over time. Whatever plan is for you, make it a habit to routinely review your overall liabilities and keep tabs on variable interest rates on a monthly basis.
If possible, try paying debts on a more frequent payment schedule than monthly. Anytime you can get that payment in a little quicker, you save yourself the interest that is racking up over time. Some financial institutions will even let you split your mortgage into two monthly payments, lowering the amount of interest you’ll pay over the life of the loan.
5. Invests In Herself
With all that cash we’ve saved from not buying an extra pair of boots (ahem, see above) we’re better prepared to do something really smart with that money, like invest in ourselves.
That might mean going to school, taking personal certification class, or even just carving out time to focus on you! Sometimes investing in ourselves can be as small as taking a few minutes a day to learn something new, read about professional development, or keep a standing date with your mentor to talk about career goals.
Bonus points if this time is spent increasing your financial literacy!
6. Saves For Retirement
Retirement investing is serious magic thanks to the time value of money. The sooner you do it, the more your future self will thank you! Financially smart ladies put away a little bit toward their non-working selves every pay period and take advantage of the tax benefits that often accompany a saving strategy.
It’s also important to take an active role in managing retirement investments as they start to grow. The funds that served you when you were first starting out in your career are likely to change over time as you potentially take on less risky investments close to retirement. Make it part of your monthly financial routine to review these investment statements to keep an eye on how they are performing for you.