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Habit #1...Cash Reserves

Over the years, I have had the privilege of working with a number of very financially successful women. They are successful because they are in control of their financial situation. What separates these women from the rest of us are the sound financial habits that they have developed.

There are seven habits that financially successful women use pro-actively and consistently to develop and maintain their financial success.

The first habit is having a Cash Reserve that gives them adequate Cash Flow to meet their lifestyle needs. A Cash Reserve is often referred to as an “Emergency Fund” or “Slush Fund”. All it really is is cash in the bank or a liquid savings plan that covers your monthly expenses. It is recommended to have 3 - 6 months of Cash Reserve to meet your immediate and unexpected expenses.

Financially successful women have created a monthly spending and savings plan over time that keeps them in the black each month. They have and use credit cards but they use them wisely and to their advantage, not disadvantage. They do not pay unnecessary interest charges - each month they pay their balance off in full from their Cash Reserve. They have their money working for them. They have created the financial life they want using cash. This is the first and most important habit to develop in becoming a financially successful woman.

Habit #2...Managing Debt

The second habit of financially successful women is the ability to manage debt wisely. We all have debts, but there is “good” debt and “bad” debt. Your mortgage is considered a “good” debt because you are building value in your home and having the debt will lead to a future gain. Borrowing for your education or borrowing to invest is also considered to be “good” debt.

“Bad” debts are credit cards and consumer loans used to finance day to day wants. A major problem is that credit cards have become a convenient form of debt that we tend to abuse and loose control over through excess spending on impulse buying.

By taking the following steps, you CAN manage your debt:
- Make a list of all your debts: mortgage, car loans, education loans, credit cards, consumer loans, lines of credit, etc.
- Write down how much you owe on each form of debt, the interest you are paying and the minimum payment each month.
- Track your current spending to get rid of wasteful spending and to find extra money to pay down your debts each month.
- Prioritize your debts and make a plan to repay them one by one.
- Stop over-spending and impulse buying.
- Start saving now for future expenses both known and unknown.
- Understand why you spend and save.

Bad debt will drain you and cause problems but it can be fixed with a plan, a little hard work and patience.

Habit #3 - Develop a Spending & Savings Plan

Two of the most important habits of financial successful women is the ability to spend and save their hard earned money according to a well thought out plan.

Typically, they do not spend on impulse. Does this restrict their lifestyle? Not at all, in fact they have an enhanced lifestyle because they are not wasting their money on frivolous things. They have made well, thought out decisions on where and how they will spend their money. They are in charge of their spending and savings.

Steps to develop a spending and savings plan:

1) Track your expenses, know what your recurring expenses are plus what additional expenses you may have on an occasional basis.

2) Write down your monthly expenses including your lifestyle expenses so you know exactly what you should be spending each month.

3) Develop a savings account for these expenses to avoid using credit cards.

4) Save 10% of your monthly income for your future financial goals such as retirement.

5.Use 15% of your monthly income to pay down debts.

6) Develop an emergency fund for totally unexpected expenses.

7) Stop wasteful spending. Have a purpose for everything purchased.

8) Track your progress on a daily basis.

A well thought out spending and savings plan is a major factor towards creating financial success.

Watch for the fourth habit of financially successful women... or Call Laurie at (403) 290-0940 or email ltreg@telus.net  to discuss your financial success.