All my life money has had issues with me. I’d work hard to make it, put it in the bank and watch it disappear.
Oh there were patches there where money and I would reconcile and stay together for long periods of time, but inevitably I’d find my money cheating on me with my bills and I’d realize that money didn’t love me as much as I loved money.
It took me a half a century to figure out how to keep money happy and believe you me, that makes me happy too. I want to share what I’ve learned with you and if I can help just one person to improve their relationship with money – well that would be a good thing.
1. Don’t spend other people’s money
Other people’s money, that means credit cards,credit union loans, bank loans, student loans and anything else that you will have to pay back with interest.
Other people’s money seems like a great idea when you’re in the line at Macy’s and the cashier says you can get 10% off of your purchase today if you sign up for a card RIGHT NOW. Trust me the one day sales and percent off coupons and those gratuitous credit limit increases will have you in debt up to your eyeballs in no time and that 10% off won’t offset the 16 to 30 percent interest you’ll be paying on your balance each month.
IF YOU CAN”T PAY FOR IT WITH CASH, YOU CAN PROBABLY LIVE WITHOUT IT. Remember your money will leave you when it discovers your affair with other people’s money.
2. Don’t spend money now that you think you’re going to earn later
You just got a new job, big promotion, your tax refund is going to be awesome this year- so you think to yourself “I’m going to earn that money later, so why not go ahead and treat myself or the family to____”. I think this was one of my major shortcomings, always spending money I thought I was going to earn before it was actually in my pocket, I like to call that “euphoria spending”. Just think about it, if I’m spending as though I’m making more, when I’m not, then something is going a gangling as they say. Maybe it’s the electric bill, the gas bill, money for the commute to work next week, lunch money for the kids…whatever. DON’T SPEND WHAT YOU DON’T ACTUALLY HAVE…YET.
3. Pay your bills in full every month
Keeps the bill collectors at bay, makes you feel rich , and helps you to keep your sanity. This is a hard one for some people, they tend to pay half of this and a quarter of that, steal from Peter to pay Paul and end up in this deep pit full of past due bills. I’ve never been one of those people, just wasn’t in my DNA, but I wasn’t always able to stay on top of things and would suddenly discover that the cell phone bill was 3 months past due because I got busy and wasn’t keeping up. Continue reading and I’ll tell you how I fixed that and how you can too.
4. Open an ING account
I am sure that by now there are other online banks that allow you to open as many accounts as you’d like and manage your money in the way that I am about to explain. Back when I started ING was the one that I found and that’s the one that has worked for me
- Open an Electric Orange account and have your paycheck Direct Deposited there.
- Add a savings account and call it “Emergency Fund” because this is where you will stash a little money every month for unexpected things like a busted water heater or car repairs and the like
- Open one savings account for each one of your bills – this will keep you on track so that you don’t miss any of your monthly payments. I name my accounts after my bills: The Rent, Gas bill, electric Bill, Cell Phone,Car etc.
5. Set up automatic transfers from your Orange account to each of the savings accounts
This will ensure that each month when that bill comes due – you have enough to pay it. Here is an example:
Bill and his wife earn $1000 per week. The table below shows their bills and the automatic transfers that should go into each account when they get paid every week,( the math may be off but I hope you get the idea):
|Bill||Amount||Weekly Automatic Transfer|
|Gas and groceries||$550||$137.5|
|Savings (external Account)||$800||$200|
As I hope you can see – by saving money from each check to pay their bills, Bill and his wife are able to live happily with their money.
6. Open an external savings account
I need to have money that is hard to get to, so I have an account outside of ING where I transfer out 20% or so of my income each paycheck. That amount is based on how much I usually have left over after bills, groceries, gas, and other necessities.
Today, money and I have a healthy relationship based on mutual respect. I’m able to eat out, shop, shower my children with unexpected gifts, build up my savings – and pay my bills on time. We’re finally happy together – and you can take that to the bank.