If your parents didn’t teach you good financial habits, you may feel at a loss when you enter adulthood and have to start taking responsibility for your own money. Luckily, you can break free of the bad financial habits that you learned at a young age. It will take practice, but it’s something that practically anyone can accomplish.

Start by focusing on these three better money habits. Over time, they’ll start to feel like second nature.

 

Lower your debts until you’re free of them

It’s amazing how much debt the average American carries: The typical American household owes $50,626 in student loans, $29,539 in auto loans, and, most glaringly, $16,883 in credit card debt.

Start decreasing your debts by concentrating on accounts with the highest interest rates. That likely means your credit card accounts, which often have rates above 20%.

Eliminating credit card debt requires real commitment. If you want to repay $16,883 on an account with a 20% interest rate, you’ll be paying $859 per month for 25 months, with $3,741 alone on interest. Keep that in mind the next time you want to buy something you can’t afford. Tip: Never make the minimum payment for your credit card. Doing so can keep you in debt for decades.

 

Build an emergency fund

A healthy savings account stands between you and debt. What would happen if you lost your job or became too ill to work? Without enough money to cover at least three months of expenses, you would probably turn to credit cards to support yourself. (We just discussed why that’s a terrible idea.)

A quick look at how much money Americans save shows that a lot of people have positioned themselves for financial trouble: 19% of respondents surveyed say that they haven’t set aside savings from their annual income, while 21% of respondents save 5% or less of their annual incomes.

Only 16% of respondents save 15% or more of their annual incomes.

It’s time to make sure that you fall into the category of people who save at least 15% of their incomes. You can do this by creating a budget that includes a line for emergency fund savings. Don’t skip any contributions to your emergency fund. Treat emergency savings like any other expense.

Tip: Find a savings account with a 1.85% or greater APY to grow your money faster.

 

Take advantage of sales throughout the year

Retailers tend to sell certain items at discounted prices at specific points in the year. During November, for instance, stores usually offer discounts on things like gaming systems, laptops, and home appliances. Immediately after the holiday season, you can find tremendous savings on toys and clothing. Stores don’t want old merchandise taking up room on their shelves, so they’ll slash prices to sell sweaters, coats, and toys as quickly as possible.

Pay close attention to the sales in your area so you never have to pay full price again. Every dollar that you save will take you a step closer to meeting your financial goals.

Tip: Don’t purchase items impulsively just because they’re on sale. If you don’t need it, don’t buy it.

It will take some time to replace your old habits with better money habits. You may find it easier to follow better behaviors by setting a reward for yourself. For instance, you can decide to buy yourself a new shirt, book, or pair of shoes when you follow your rules successfully for a month. Just make sure that the reward doesn’t cost too much. Otherwise, you may undo all of the good that you worked for.



The information mentioned in this article is for informational purposes only, is intended to provide general guidance and does not constitute legal or tax advice. Each person’s situation is unique and may materially differ from the information provided herein. You should seek the advice of a financial professional, tax consultant and/or legal counsel to address your specific needs before any financial or other commitments regarding the issues related to your situation are made. Popular Bank does not make any representations or warranties as to the content contained herein and disclaims any and all liability resulting from any use of or reliance on such content.