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4 Smart habits with people with a written finance plan – Motley Fool

We are not all planners by nature. Some of us like to wing our way through life, while others need their plans mapped out well in advance. But when it comes to managing your money, it can be easier to create a written plan and meet your goals. Here are some of the habits people with a financial plan tend to maintain, according to Schwabs 2019 Modern Wealth Survey.

1. They save money every month

Social security does not provide enough income for you to live comfortably in retirement, and therefore it is important that you save for your golden years alone. Now the good news here is that 78% of people with a financial plan make save money each month (either for retirement or other purposes). The bad news?

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If you're not used to saving on a regular basis, it's time to examine your budget or create one if you don't have one yet, and identify ways to cut costs on a continuous basis. Reducing any recurring expenses will allow you to free up cash that can be used to build a nest egg for retirement or meet other important goals on your radar.

2. They have emergency savings

You need emergency savings, so you are not forced to resort to debt when an unplanned bill lands in your lap. This bill can relate to a home repair, a problem with your vehicle, a medical problem or something else, and it can be significant. Therefore, you really need at least three months of valuable habitats in tucked away in the bank. But while 68% of people with a financial plan have an emergency fund, only 26% of non-planners can say the same. As such, non-planners may find themselves forced to borrow money to cover unplanned expenses, either in the form of a credit card balance or a personal loan.

If you are without savings, it is important that you slash some short-term expenses to build cash reserves. It may mean that no one goes out for dinner at all until your bank account is in a healthier state. At the same time, consider getting a side pocket to drum up extra money for savings. Any suggestions? Consult your regular field in the evenings and weekends (provided your employer allows this), or take a hobby you like, like graphic design or animal care, and make it a paying gig.

3. They automate their savings

The beauty of automating savings eliminates the temptation to spend money that should be earmarked for more important purposes. A good 74% of those who have a financial plan have automated savings, while only 25% of non-planners have similar setups.

You can automate your savings in a number of ways. If your goal is to throw your emergency fund, you can arrange to get a portion of each paycheck country in a savings account. If you want to build a witch egg, you can sign up for your corporate 401 (k) plan and get the money filter automatically for that account. And if you don't have access to a 401 (k), you can find an IRA with an automatic transfer feature and do the same.

4. They never carry credit card balances and either make timely loan payments or have no payments to make

. Carrying a credit card balance can not only harm your credit points but cost you a lot of money in interest. Falling back on payments can also damage your credit, making it more expensive for you to borrow money when you need it. An estimated 45% of the planners make a point of never having a credit card balance, and among those with outstanding loans (say of the education area), they make payments on time. But only 27% of those without a financial plan do the same.

If you're already in debt, make a point of keeping up with your payments to avoid adversely affecting your credit score. Automation of these payments is a good idea, since it will take forgetfulness out of the equation. At the same time, use your credit cards wisely simply by charging an amount you can afford to pay when each monthly bill comes due. This will help you avoid wasting money on interest and jeopardizing your credit score.

Even if you don't have a financial plan, it still pays to maintain the above habits that will help you properly manage your money. Furthermore, consider setting some of your best financial goals in writing. Doing so can motivate you to make smarter choices that really pay off in the long run.

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