If you want to experience real financial freedom, live by these four simple financial principles.

Why These 4 Principles Help You Manage Your Money Better

We’ve heard it time and time again: money can’t buy you happiness. And while that may be true, life is a whole lot easier if you have money and you know what to do with it.

Responsible money management isn’t exactly sexy or wildly fascinating, but the life it affords you can be both of those things. 

So here’s to a sexy and wildly fascinating year because if you live by these four financial principles, you’ll manage your money a whole lot better than ever before.

Principle #1: Don’t Spend More Than You Make

Duh, right? It sounds like a simple mantra, but it’s actually pretty easy to overspend. Especially, ahem, if you rely on credit cards (i.e., imaginary money) on a regular basis. Listen: the more you spend, the harder it is to catch up and save. 

Your resolution: Create a plan (hello, budget) and use cash. Whether you use a simple spreadsheet or one of the many apps out there, the goal is to keep an eye on that cash flow. Nav.it will help you see all of your accounts in one place so you always know the money that is coming in and what is coming out (and where it’s going).

But here’s the real trick: Find a “budgeting” tool that works best for your life, otherwise you’ll have a hard time sticking with it. So if you’re a freak in the spreadsheets, bust out Excel and thrive, honey. Or if you’re all about apps, see if your bank or credit card itself might have spending tracking, too.

Pro tip: Reframe the idea that a budget is restrictive. The point is just to have an idea of where your money is going monthly (even if you don’t know where you’re going this weekend). 

Direct deposit and Venmo have made cold, hard cash a thing of the…’90s? But cash keeps things real. Carrying a wad of bills in your clutch might sound inconvenient, but carrying a hefty credit card balance is a lot worse. It’s way too easy to swipe a card and think about the consequences later. So, give cash a try. Next time you go grocery shopping, bring exactly the amount you want to spend (here’s a few tips for saving at the grocery store) and see how you do. 

Principle #2: Pay Off Credit Card Balances Every Month

Credit cards aren’t all bad. They’re a necessary part of building a healthy credit rating and they offer some pretty amazing perks (hello, airline miles!). However, no amount of cash-back rewards is worth paying a late fee, accruing interest on a growing balance or taking a hit to your credit score.

Your resolution: Set up monthly automatic payments to ensure you never miss a due date. You’ll need to ensure there’s enough money to draw from your bank account, but with your new budget, you’ll be prepared ahead of time (setting up calendar reminders for the day autopay hits your account can help, too).

Principle #3: Avoid Debt (and Pay Off School Loans ASAP)

Debt is like a Gremlin. It multiplies and wreaks havoc on your life–especially credit card debt. Again, if you play the credit card game right, there are benefits–like cash rewards!–but that takes a lot of skill, self-discipline and knowledge of the system. 

When you’re starting out, you might want to go slowly and understand the rules for using debt to your advantage instead of being ruled by it.

Your resolution: Skip unnecessary debt, such as department store credit cards and personal loans. If you’re in the market for a car, check out pre-owned vehicles and shop around for the best interest rates (which aren’t always at the dealership’s financing office FYI). Credit unions and local banks are a good starting point because they can usually give better interest rates than commercial banks (i.e., the big guys).

You’re probably thinking: well, how do I avoid the school loan debt that I’ve accrued. We get it, you’re not alone. Four in 10 adults under age 30 owe money toward their education. If you find yourself juggling multiple loans, consider the debt snowball method or the debt avalanche method (both methods described in our article for paying down credit card debt) to pay it down as soon as possible.

Principle #4: Be Conscious About Your Spending

You seem to know everything about your best friend’s new bae (thanks Snapchat), but how much do you know about where your money is going every month? That trusty budget we talked about will help guide your spending and make you aware of behaviors that might be worth adjusting. 

Being a conscious spender shouldn’t make you feel restricted. In fact, it should open your eyes to new opportunities like where to save and where to maybe spend a little more (I’m looking at you, Whole Foods cheese counter). It also gives you a chance to learn how people make money off you. Especially financial institutions who take fees for their services. (Psst! Start by asking your 401K administrator and your bank their fees for service, and you’ll see what we’re talking about.) 

Your resolution: Conscious spenders don’t always pay the first price they see. Jet-setters sign up for travel newsletters announcing the latest flight sales; foodies know that happy hour is the best time to catch a deal; and art-lovers map out the best free museums. High-rollers negotiate on the big purchases and know when to ask the jeweler to throw in a perk for dropping that much dough. 

The point is: No matter what you’re interested in, the more you understand the financial system, the more a little research can make your money go so much further. 

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