Five Good Financial Habits to Adopt in the New Year

JAN 04, 2012

Many of us head into the new year planning to break some habits, like over-eating, watching too much TV or over-using credit. But when it comes to habits, it can be good to focus on creating new good ones, rather than just breaking the bad ones.

If your New Years resolution is to establish good financial habits, here are five that are pretty easy to implement, but that can pay off nicely for you in the new year:

1. Create a coin jar. This seems so basic and simple, that its hard to believe anyone might not already have one. What do they do with all that loose change that lingers in the bottom of their purse, pockets and couch cushions? If you dont have a coin jar, get one today and clean out your regular coin collection spots (you know where they are). Save those coins and before you know it, youll have a tidy sum saved up. In fact, Coinstar, the company that runs those coin-counting kiosks you see in super markets and other places, estimates that American households have around $10 billion in loose change sitting around.

2. Establish auto-pay for recurring bills. Is your Internet bill the same every month? Probably, it is. Its likely you have other bills that are the same every month too, from your mortgage or rent all the way down to your kids tutoring costs. Whenever possible, put those bills on auto-pay. That way, you wont forget them and theyll always be paid on time. One caveat, however ”dont think auto-pay means you never have to look at the bill or your account statement. Keep track of both to make sure everythings going smoothly. And while were talking autopay

3. Put yourself on autopay, too. Most employers now offer automatic paycheck deductions, or allow you to deposit a portion of your pay into a savings account as well as your checking. By automating your savings and retirement investing (think 401k or IRA accounts) youre guaranteed to do it, without having to think about it.

4. Sign up for credit monitoring. Its really not that expensive and it can spare you a lot of heartache ”not to mention time and money ”by helping you detect signs of fraud or identity theft  early. If a monitoring service is truly outside your budget (and kudos to you for knowing and acting accordingly if thats the case), then use other methods to keep on top of your credit. Keep a close eye on all your credit accounts. Check statements monthly and access your online credit accounts at least once a week. Access your free credit report online ”youre entitled to review it once a year for free.

5. Change the way you look at money and credit. When you dont have a lot of money, or are struggling with bad credit, its easy to let thoughts of your problems overcome other things in your life. But money is not the point of living; its a tool to help you live. Whatever your personal finance style money is a tool you can learn to use just like you learned to drive a car or use a hammer to drive a nail. Make it a good financial habit to keep learning about smart ways to use money and credit.