So take this advice from DaveRamsey.com—tips and tactics for keeping the wolf far, far from the door:
1. Prioritize long-term goals.
Saving for retirement should come before setting aside money for children’s braces and even their college costs. For example, at age 30, you should have at least your annual salary saved. By the time you turn 40 years old, aim to save three times your salary. At age 50, you could have six times what you earn annually saved for retirement. By the time you hit age 60, the goal is to have eight times your salary saved—and it should reach 10 times your salary by age 67.
2. Get on the same page with your significant other.
Going over the bills and budget together can end squabbles about money. Indeed, many couples fight about money, spending and how to build wealth. It’s no secret that money is one of the leading causes of divorce. One way to prevent this is to make sure you and your partner are on the same page financially. Even if divorce or a breakup isn’t an option for you, being on the same page is a great way to reduce stress and arguments in your marriage or relationship. One way to do this is by reading the same books. Digesting the same information and staying informed together can help your goals align and make it easier to understand each other’s ideas and viewpoints.
3. Be patient.
Save until you have cash for that car, home theater system, vacation or the like. Patience defeats the mortal enemy of financial plans—instant gratification. Instant gratification leads to a hit-and-run on your bank account. It leads to impulse spending that deftly removes a chunk of the money you meant to save.
Instant gratification is terrible for your wallet, and it has adverse effects on your body and mind as well.
4. Balance your checking account.
This helps you start, monitor and stick with a budget. A well-kept budget helps you figure out your long-term goals and work toward them. If you float aimlessly through life, tossing your cash at any shiny object that happens to catch your eye, how will you ever save up enough money to buy that new vehicle, take that trip to O’ahu or put a down payment on a house? In addition, far too many Americans spend money they don’t have. This is a result of easily accessible lines of credit and debt-based consumer culture. Break the mold and focus on building wealth, not a mountain of debt.
5. Keep savings and checking accounts at separate banks.
If you don’t see your savings when you log into your more frequently accessed checking account, you won’t be as tempted to tap that money. Set up automatic saving contributions and leave that money to grow and work for you. In 5, 10, 15 years, you’ll thank yourself.
6. Issue yourself an envelope filled with your monthly fun money.
Once that cash is gone, wait until the next month for the next “fun” expenditures. Building wealth requires planning and discipline. The allowance system works for many individuals and families.
7. Have an emergency fund.
This is your parachute in case a job loss occurs or a huge expense pops up. (You should also build a fund for smaller irregular expenses like medical prescription costs or appliance repairs.) It’s no surprise life comes with the unexpected and these unexpected expenses can threaten your financial well-being and cause stress. If you’re living without an emergency fund, you’re living on the financial edge and hoping to get by without a crisis. A proper emergency fund provides you the security and confidence to tackle any unexpected expense life throws at you.
8. Communicate with your lender or banker.
As you set up a plan to pay off debt, questions may arise. Credit card companies and banks often will agree to better terms or cut fees if asked.
9. Embrace the power of cash.
Paying with paper gives you leverage to negotiate discounts, and your natural reluctance to give up cash can curb frivolous purchases.
This post was originally published in September 2015 and has been updated. Photo by @Katsuya/Twenty20