Are your credit-card balances soaring? Do you routinely pay your car bill late? Are you in constant danger of draining your checking account?
If "yes," you need to develop better financial habits. Fortunately, if you master just five financial habits, you can change your life for the better.
And the best news? Mastering these habits is not a challenging task.
Make a budget: As this story from BB&T Bank says, drafting and sticking to a household budget can quickly give you control over your finances. This makes sense: If you know how much money you make each month and how much you can afford to spend, you'll be less likely to overspend.
Fortunately, making a household budget isn't nearly as daunting as you might think. Simply list how much money comes into your household each month, then list how much you spend each month on everything from car payments to groceries to rent and student-loan payments. You might have to estimate for some items, such as how much you spend each month on entertainment or dining out.
Once you have a budget, stick to it. If you know you can only afford to spend $100 a month on restaurant meals, don't blow past this budget during the first week of the month.
Don't just pay your credit card's minimum: It's tempting to pay your credit card's minimum required payment each month. But doing so means that you'll pay a lot in interest and that it'll take you months, maybe years, to pay off your credit card debt.
Consider this example from a story by MarketWatch: If you have a $2,000 credit balance with an interest rate of 18 percent, and your minimum monthly payment is just 2 percent of the balance, it will take you more than 30 years to pay off that debt. And that's only if you don't make any additional charges with that card.
Build an emergency fund: If you needed to replace your car's transmission would you have the funds to do so? And if you didn't, would you simply put the repairs on your credit card bill?
That's what happens when you haven't built an emergency fund. As this story by Wells Fargo says, an emergency fund is a savings account that you only tap to pay for unexpected emergencies.
How much you should save in an emergency fund varies, but financial experts say your fund should have enough money to cover from three to 12 months of daily living expenses.
Boost your credit: Your three-digit FICO credit score is a key number. Lenders rely on it to determine if you qualify for mortgage, auto and student loans, and at what interest rate. If your score is high say 740 or higher you'll qualify for the lowest interest rates. If your FICO score is under 640, you'll struggle to qualify for any loan at all.
The best way to build a strong credit score is to pay your bills on time every month. Paying a single credit card more than 30 days late could cause your score to drop by 100 points.
It helps, too, to pay off as much credit card debt as possible. Your score will rise if you carry little to no credit card debt from month to month.
Only charge what you can afford: Do you carry a balance each month on your credit cards? That's a big financial mistake, one that will cost you plenty in interest. It's better to only charge what you can afford to pay off each month.
Credit card balances have a way of growing each month thanks to the high interest rates attached to them. Not carrying a balance means that you won't have to worry about those rates.