4 Money Skills to Master in 2016

Date posted: June 27, 2016

Photo Credit: Julia Caesar

Mastering your money is a lifelong process that evolves as you age. At every stage in your life, there will be new skills to master and new concepts to tackle. For example, when you are young and just starting out, learning to budget and pay back your student debt will be your primary goals. As you age, you’ll need to become skilled in saving for retirement and learning about more complex financial concepts like life insurance.

But in today’s digital age of money management, there are critical skills that you absolutely must master for your finances to thrive, no matter your age or life stage. Here are the four essential money skills everyone needs to learn in 2016.

Become an Online Banking Ninja

Online banking used to be for just young people, but that has changed in recent years. Now 55% of Canadians use online banking as their primary form of banking.

Online banking has become ubiquitous in this digital age, but few Canadians use this relatively new technology to its fullest potential. Beyond just using your computer or cell phone for tasks like paying bills or transferring money into your savings accounts, here are three ways to take your online banking skills to the next level:

•    Use your cell phone to deposit cheques. Most online banking mobile apps have this ability, and once you try it, you’ll never go back!

•    Set up automatic withdrawals. The best way to hit your savings goals is to make it automatic.

•    Set up your debt as bill payments. I set up my student loans and car loan as a payment in my online banking. That way, whenever I had an extra $20 in my account, I could make an extra payment quickly. Removing all barriers to paying off my debt helped me pay it off much faster.

Track Your Spending Like a Boss

Knowing where your money goes is the only way to come up with a realistic financial plan, so you must learn to track your spending. The method you use depends on your personal preferences. You could go old-fashioned and use a pen and paper, you could use a spreadsheet, or one of the many online tools available for free like Mint.com or You Need a Budget.

Tracking your spending is a skill that everyone should master whether you are a new graduate just starting out, or you’re almost ready to retire. Once you get in the habit of tracking your spending, you’ll see where your money is going every month, and you can begin to make plans to put that money to better use, like paying off debt or saving.

Personally, I prefer using an excel spreadsheet and categorizing all of my transactions.

Zero Out Your Credit Card Every. Single. Month.

Paying off your credit card debt every month is an essential financial skill, yet 46% of Canadians had credit card debt in 2015.

If you are one of the many Canadians carrying credit card debt, then your first task is to pay it off. Stop using your credit card and switch to cash-only spending, and focus on paying off that debt as quickly as possible.

Once your credit card is paid off, you can begin using it again, but only if you commit to paying it off every single month. If you don’t, the interest charges will take effect, and you’ll end up back on the credit card debt treadmill.

A good rule of thumb to ensure that you pay off your credit card every month is only to use it for purchases that you could pay for with cash. If you can’t buy it with cash, you shouldn’t be charging it to your credit card!

I admit, I struggle with this skill. I pay off my credit card every month about 90% of the time, but I still occasionally slip up and charge purchases that I can’t afford. I’m improving, and I continue to strive to pay off my credit card every single month.

Master Talking About Money with Friends and Family

Personal finance is still one of the most taboo subjects in our society. We can talk about almost anything – religion, politics – but money is still off the table most of the time. This reluctance to discuss our personal finances is a shame. Talking about your money with friends and family is a great way to learn and grow, to improve your money skills and most importantly – to find the motivation you need to reach major money goals like paying off your debt or saving for retirement.

When I started writing my personal finance blog, I knew that someday my friends and family would find out about it, and suddenly everyone would know my darkest financial secrets.

But guess what? I’m happy they know because I enjoy talking about my money with family and friends. It helps me push to improve, and I learn financial management tips and tricks along the way.

Mastering your money is a lifelong progress. I’ve been writing and blogging about money for five years, and there are still many aspects of financial management that I have not yet mastered. But the beautiful thing about money is that you can work at it a little bit at a time and eventually, you’ll be a money master.

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