It can be extremely easy to feel like you’re not “good with money”. Take it from me: I’m a type A perfectionist; I get it! It’s hard to not get down on yourself sometimes. This past week has taught me it’s extremely important to recognize personal progress though. Like me, you may feel like you have a long way to go still before you’re “financially comfortable”. However, you are currently taking the time to read a financial blog, so I suspect you’re in a much better knowledge state than you give yourself credit for! Sometimes it’s important to acknowledge the things you have already accomplished/learned instead of simply focusing on what still needs to be done. Here are 11 signs you’re better with money than you think!
11 Signs You’re Better With Money Than You Think:
1) You spend less than you earn
This is essentially the main rule to healthy finances! In some capacity, you have to spend less than you earn. Without “excess money” you have nothing left for debt repayment, savings, or investing (Ie the things that improve your financial future). If you’ve mastered number 1, you’re already well above average! (half of americans are living paycheck to paycheck)
2) You pay more than the “minimum”
The minimum payments on credit cards, mortgages, lines of credit etc are designed to keep you in debt wayyyy longer. You need to remember that loaning money is a business; the longer you’re in debt the more the bank/company earns from you in interest. They don’t make payments easy on you out of kindness, they do it to get rich. Contributing even a tiny bit more than the minimum expectation (see what effect it can have on your mortgage) can help you reach your goals years faster.
3) You pay your bills on time
Bills suck; there’s no way around that. However missing or being late on payments can have a massive effect on your credit score. Automate your bills so they get deducted without you needing to remember them, and ensure you have money available in your account so that the withdrawal does not bounce!
4) You take advantage of free money
Does your employer have a contribution matching plan? If so, are you using it? They are literally offering to give you free money! It’s the closest thing to a guaranteed lottery win you will get. Take advantage of the offer; your future self will thank you.
5) You might have debt, but you know how much + have a plan
Unfortunately, debt can be unavoidable at times. I put myself through university, and graduated with 100k in debt. Do I hate the debt? Of course! But I also recognize that without my debt I wouldn’t have my career. Your debt doesn’t define you. However, you do need to take the scary step of adding up your total debt (most people have it spread out in numerous places). Figure out how much you have, and commit to a plan for paying it off. Having debt NOW does not mean you need to be in debt FOREVER.
6) You say “no” when you can’t afford it
I’ll admit this one can be damn hard. It feels like there’s a social stigma attached to “I can’t afford it“. Like I discussed in that article, people worth knowing will still value you and want to be around you even if you’re “broke”. Be imaginative! Come up with cheaper and/or free options that are still fun. You don’t need to sit at home depressed, you just need to get more creative.
7) You know how to calculate your net worth
And you actually check it at least once a year! It gives you an unbiased snapshot of where you are financially today, regardless of future potential. In this article I explain how to calculate your net worth, and explain why a homeless person may be better off than a doctor!
8) You have at least one financial goal
It does not particularly matter if it’s long or short term; it’s the act of goal setting that matters. The more you accomplish, the more you will want to do, and the higher you’ll reach. Action precedes motivation! (The princess waits, but the queen saves herself).
9) You put something into savings each month
I personally prioritize my debt payments over saving/investing. However, I still contribute $25 a month into an index fund. “Should you save money when you have debt” is a popular question, and I’d argue yes! It’s about habit building. Once you start saving, you’re a saver. You’ve made it into the club!
10) You’re honest about your financial status
In particular, you’re honest with yourself! Finances can be scary, and debt can feel outright terrifying. You can’t fix something by putting your head in the sand though. Small changes can have massive effects on improving your situation, but you first need to know what situation you’re starting in. If you haven’t yet, spend a Sunday morning drinking coffee and figuring out exactly where your money is at. Oblivious may sound nice, but it won’t get you anywhere.
11) You’ve read at least one financial book
I believe there are two things that show your commitment: where you spend your time, and where you spend your money. Everything else is just cheap talk. There are fantastic financial books out there; read them! And news flash: some of them are incredibly fun to read. Check out this list for the personal finance books you NEED to read!
There you have it: 11 signs that you’re better with money than you think! Do you feel I’ve missed any important check points?
You don’t need to have everything figured out immediately. Slow progress can still take you incredibly far. Look back to where you where a year or so ago… are you in the same spot? Celebrate your progress! It’s hard work, and you should feel proud.
For a list of all posts I’ve written, look here