By Keith W. Young
Characteristics of a Good Money Manager
What happened to the old sayings, “Live within your means and save for the rainy days.” In most households, these sayings have been forgotten. People who practice good money management skills typically have common characteristics. They are:
Good money managers pay their bills on time. They avoid late charges. They pay down high-interest accounts first. To stay on track, they reconcile their bank statements on receipt and use technology and common sense to monitor continually their spending habits. Paying off all or a big chunk of credit card balances each month is also a benchmark of good money management.
People who are good at managing money plan for emergencies before they occur. Setting aside a portion of income — methodically and immediately — becomes habit to savvy consumers. These people can maintain their lifestyles even after financial disruptions. Some people who are good with money set aside a percentage of their income to meet emergencies; others set aside from 3 to 12 months’ worth of living expenses.
A good money management practice is to keep a detailed budget. People who are clever at managing their money use spreadsheets to track expenses and receipts so they always know their financial situation. Some keep journals to spot inconsistencies that could require a change in spending habits.
People who are good at managing money shop around for credit cards, insurance plans, cars, mortgages and big-ticket items. They research rates, rebates, discounts and deals before they buy. According to George Mason University, working Americans average 10 credit cards in their wallets. People who are adept at personal finance probably don’t have that many, but if they do, the interest rates are likely to be low.
A good money manager makes a yearly check of the three major credit reporting bureaus to make sure inaccurate data doesn’t pull his or her FICO scores below 650. This is the number that tends to separate good from bad credit risks. Good money management involves awareness of the risk of identity theft, and monitoring of credit reports to make sure nothing negative winds up on them. These are just a few characteristics of people who do a good job of handling their money.