You Need a Financial Reporting Buddy
Automation is one of the most important ways to get your finances in order. Automatic retirement or other investment account deposits and savings account transfers have been shown to encourage people to save more, while automatic bill payment can help people reduce late fees and improve their credit scores.
But you cannot do everything yourself. It is equally important to have someone to hold you accountable.
This could mean a friend with whom you make impulsive purchases before you make them, or a significant other with whom you share a financial goal.
An important part of this is to let people know when you have a goal so they can help you achieve it. Here’s one example of a couple who managed to pay off tens of thousands of dollars in debt by telling friends about their plans, from CNBC :
Once [David and Mag Cahill] made a commitment to actively paying off their loans, “we actually sat down with our friends, told them about the ambitious plans we had and asked them to give us responsibility,” says Cahill.
It was the smartest step they took in paying off the debt, he said: “The support we received from them — text messages and encouraging phone calls — really made the difficult experience so much more enjoyable for us.”
Plus, inviting your friends aboard immediately made it easier to give up the social activities that had to be paid for. “They were very supportive and realized we couldn’t go out for drinks or bowling on Friday nights,” Cahill says.
Your buddy can be anyone – and there are apps you can use too – but ideally he or she is someone you trust, whose feedback you don’t take personally, and who is on the same page that and you. So, for example, if you’re trying to cut down on unnecessary expenses, you shouldn’t choose a friend who leaves every weekend. If you are saving money for your first child, it will be helpful for you to choose someone who has been there before and can offer advice during difficult times.
Once you’ve chosen your buddy, set up a check-up schedule. Maybe it happens every day, every week, or whenever there is an impulse to buy something, as noted above. Put a reminder on both or your phone calendars and decide ahead of time if you will meet in person, by phone, or by email.
Better yet, start early. Be your child’s accountability partner so you can teach him about money and how it works.
Going on vacation or getting ready for the New Year is the perfect time to get a better understanding of where your money is going.