In order to keep moving forward financially we need to spend less than we earn.  That doesn’t mean going without.  It means making spending choices based on a well-defined plan (budget) so that your spending choices don’t cause you to:

(1)  go into debt,

(2)  dip into savings you have earmarked for other purposes, or

(3)  delay making wise financial decisions for your future.  

Because you do not have anyone else to whom you are “accountable” for your spending it can be easier to spend. Let’s look at some of the habits you will want to develop when it comes to spending.

Budgeting      

One of the best ways to gauge your spending and make a spending plan that will help you keep moving forward financially is creating, and sticking to, a realistic budget. 

A budget is simply a tool that you can use to your advantage to see…

• how much income you’re really bringing in (after taxes and deductions),
• how much money you are spending,
• how much debt you’re carrying and need to pay off, and
• how much you either have, or need to begin accumulating, to save and invest for your future. 

Creating a budget is a very important first step toward reaching your future financial goals.  Learn more about how to make – and stick to - a realistic budget. 

If you work at a job (or more than one job) that pays sporadically or on an irregular basis – i.e. freelance work, seasonal work or part-time work – learn how to create financial stability and structure without a steady paycheck.

Bill-Paying    

Paying bills is just a fact of life.  It is important to pay your bills on time because late payments can affect your credit report, which in turn affects your ability to borrow money at a reasonable interest rate in the future.

Paying bills is also an opportunity to regularly reflect on the spending decisions you are making, see if they line up with your financial priorities and make small changes along the way.  Learn more about effective bill-paying tips. 

Keeping Control over Your Credit Cards

Nearly half of all single women (43%) have credit card debt (Federal Reserve System, 2006 Survey of Consumer Finances) and the average credit card balance for single women is $1,900. 

Nothing will derail financial planning faster than getting into credit card debt.  Credit card debt eats up hard-earned income through:

• compounding interest
• penalties
• late fees
• annual fees

Learn why debt is considered the “anti-investment.”  Instead of automatically reaching for a credit card, try to use cash as much as possible.  If you do choose to use a credit card it’s important to do so carefully.  Consider the following tips:

• try to keep just one credit card
• use websites like Cardtrak.com to find a card with the most attractive features, including lowest annual percentage rate, fees and benefits.  
• avoid using your card for cash advances – there is usually a much higher finance charge for cash advances and the interest begins accruing as soon as you withdraw the money, not on your next statement closing date
• beware of low interest rate introductory offers – they typically expire in three or six months. Note how much the rate is scheduled to increase and either (1) pay off the card and close the account, (2) transfer the balance to another, lower-rate card, or (3) keep a strict eye on how much you use that card and keep a low balance (if any at all)
• enter the amount of your credit card purchase into your checkbook register, deducting the amount from your checking account on paper, so that at the end of the month when your credit card statement comes you can simply write a check for the complete amount
• check your statement every month to ensure that there are no inaccuracies
• if you have a history of making your payments on time, ask your credit card company to lower your interest rate

It’s important to use your credit cards wisely so that you have a good credit score.  A credit score is number between 300 and 900 that is determined by information creditors provide (i.e. previous payment habits, whether or not you only pay the minimum amount, etc.).  Future creditors use your credit score to calculate how much risk they are taking when they lend money to you – in other words, whether or not you are likely (based on your previous payment habits) to repay your debt on time and in full.  Your credit score (also sometimes referred to as a FICO score because it was developed by Fair, Isaacs and Company) is available for both you and potential creditors to see through the three major credit bureaus.  Learn more about how to check and verify your credit record and your overall credit score.