To get ahead, track your spending, and consider being a cash-only operator
When we seek professional help, it’s usually because our health is suffering or our vehicles aren’t running quite right. But calling in the big guns can work wonders for your finances, too. We turned to Farnoosh Torabi, a New York personal finance expert, to learn some of her top tips for money management. Although Torabi specializes in making personal finance accessible for young adults, her advice will come in handy regardless of your situation. Some do’s and don’ts:
■ Track your spending. “We’re more and more detached from our finances - we’re not using cash anymore, so we’re not watching the dollars leave our wallets,’’ Torabi says. “The Internet makes it so easy to buy things; we don’t take the time to reflect on whether we’re making the right decisions for our finances.’’
■ Automatic bill pay “is great because you don’t get behind on your bills, but you take a back seat to managing and monitoring your finances. Do you really remember what you paid last month for your cellphone?’’ Torabi suggests using online tools to monitor your finances daily. “Do it like you do Facebook or e-mail.’’
■ Pay attention to the small stuff - “little things that add up, like ATM fees, unused gift cards, unused Groupons. . . You can spend as much as $300 or $400 a year if you use a different [ATM] two or three times a week.’’
■ It never hurts to ask. “If you put in a new smoke alarm or a new security system, call your insurance agency and ask for a discount,’’ Torabi says. “Maybe you took the car keys away from your teenager - that means you can save money’’ on insurance.
■ Become a cash-only operation. “Cash keeps you honest about using money,’’ Torabi says. “When you have to pull that last $20 out of your wallet, and it’s the $20 that has to get you through the end of the week, you’ll be a lot more discriminating with what you buy.’’
■ Take charge of your debt. “Pay off the credit card with the highest interest rate first. Get rid of that sooner rather than later, and work your way down.’’
■ Learn to control impulses. “Before you buy anything you don’t really need, walk away for a minute. Put some distance between yourself and the thing you didn’t really plan on buying.’’
■ If you’re having a crisis, call for backup. Contact the National Foundation for Credit Counseling (nfcc.org) to find a reputable credit counseling agency that will help you plan to pay off your debt. For less serious debt situations, visit Credit.com.
■ Get help online. FinAid.org is a wealth of information on college tuition, student loans, scholarships, and more. Bundle.com, like its predecessor Mint.com, aggregates accounts, tracks your spending, and compares your spending habits with those of people in your area or demographic. Manilla.com aggregates assets and liabilities on one page, letting you access your financial data with a single sign-on.
Holly Thomas writes for The Washington Post.