There’s a ton of financial advice out there. How do you know what will actually work for you? As a personal finance geek, I’ve jumped on board and tried just about every financial trend and pieces of wisdom. Some tips worked for me, while a lot didn’t. But when it’s all said and done, here are the 3 money rules I live by, no matter what.
Money Rule 1: Check in on your finances daily
First on my list of money rules – I check in on my finances daily. I set this rule for myself when I was a recent college grad. I wasn’t earning much money, and I carried several thousand dollars of student loans. While it was definitely tempting to put my head in the sand and ignore my financial situation, I decided to face it head on. No matter how ugly my finances looked, I made it a point to check in on my accounts daily.
This step may seem small, but it was single handedly the best thing I have ever done for my finances. By checking in daily, I got a real-time snapshot of exactly where I’m sitting. That helped drive my spending decisions during the day. After all, that $5 latte loses its appeal when you see how else you could use that money.
Checking in daily also kept me motivated towards my financial goals. Once I started making a tiny bit o progress in paying off my student loan debt, my motivation increased. Seeing progress is key!
Money Rule 2: Never carry a credit card balance
Fortunately, I implemented this rule in my life early enough to never have had credit card debt. I am an avid credit card user. I use the points to pay for travel and vacations. However, I made it a point to never carry a balance on my credit cards, and I’m glad I did.
Credit cards have insanely high interest rates, making it extremely difficult to get out of debt. Instead of relying on credit cards in an emergency, I worked to build my emergency fund. Even when I was in student loan debt, I kept my emergency fund. Even a small, $500 emergency fund can save you when you need it.
Money Rule 3: Pay cash for large purchases
Out of all my money rules, this is likely the most debatable, but I always pay cash for large purchases. Most large purchases, such as cars, furniture, or home improvement expenses will allow you some sort of financing option. The interest rate, if you choose to finance, is typically pretty low here, so most people choose to finances versus pay cash for these types of large expenses.
So why do I always pay cash? The primary reason is I simply don’t like owing anyone anything. Once I paid off my student loans, the only debt I had was my mortgage. It feels liberating to own something outright and not have to worry about making payments on it.
Secondly, I can use cash as a bargaining tool. For instance, I can walk into a furniture with a $2,000 budget and see a couch for sale for $2300. By having cash, I can make quick decisions and offers. Most of the time, I can get that $2300 couch for $2000 simply because I can pay in cash and leave today with the item. Not everyone will bite at a cash deal, but it’s fun to use this tactic to try to negotiate the best price!