Though Americans are slowly but surely ramping up their savings game, most are still falling short in that arena. An estimated 57% of U.S. adults have less than $1,000 available in savings, while 39% have absolutely no savings at all. Clearly, this means most of us need to do better. With that in mind, here are a few key habits that can lead you to healthier finances.

1. Following a budget
Most Americans don’t follow a budget despite the fact that it’s one of the most effective money management tools.

If you’re eager to get a better handle on your finances, then it’s crucial that you understand where your income is going month after month.

To create a budget, simply list your existing monthly expenses, factor in one-time expenses (like your insurance payment that comes due once a year), and compare what you spend to what you earn.

If you’re living paycheck to paycheck, which is the case for most Americans, then you’ll need to examine your various spending categories and decide which ones to cut back on.

2. Automating savings
It’s hard to spend money you don’t gain access to. If you haven’t been the best saver in the past, one solution is to set up an automatic savings plan, whether by having money from each paycheck filter directly into the bank or into your company’s 401(k). This way, you’ll be assured that at least some portion of your income is being saved, thereby eliminating the option to spend it frivolously.

3. Avoiding impulse purchases
If there’s one thing that can really derail your savings efforts, it’s an impulse purchase. And if you’ve fallen victim to such purchases in the past, you’re certainly not alone. It’s estimated that five out of six Americans make impulse purchases, and 20% who have gone this route admit to spending $1,000 or more on a whim. To avoid wasting money, institute the 24-hour rule for nonessential or unusual purchases: When you get the urge to buy something, commit to waiting 24 hours before moving forward. Chances are, you’ll come to your senses within that time frame and realize you’re better off banking that money than purchasing an item you don’t really need.

4. Paying bills right away
Not only can paying your bills on time help you avoid late fees, but it can also play a huge role in helping you build and maintain good credit. Therefore, it’s wise to get into the habit of paying your bills as soon as you receive them. Better yet, sign up for autopay options whenever they’re available to eliminate the possibility of being late.

5. Reviewing your credit report every four months
In a study last year, 16% of Americans admitted to never checking their credit reports. If you’re one of them, then it’s time to change your ways. That’s because an estimated 20% of credit reports contain errors, and if you don’t take steps to correct a mistake on your record, it could end up dragging down your score, making it more expensive to borrow in the future. You’re entitled to a free copy of your credit report every year from each of the three major bureaus: Equifax, Experian, and TransUnion. As such, it pays to request one online every four months, review it thoroughly, and report any errors you spot. This will also help you avoid falling victim to identity theft.

6. Studying your bills for errors
How often do you pay your credit card bill without reviewing your statement line by line? Many of us don’t take the time to thoroughly study our bills, but by not doing so, we risk paying for charges that aren’t actually valid. Pledge to never pay a bill before reading it from beginning to end — you’ll reduce your chances of overpaying.

If you’re serious about saving money and improving your financial picture, then you’ll need to adopt these smart habits. The good news? All these suggestions are easy to incorporate into your life, and once you do, you’ll be happier for it.

–Maurie Backman

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Source: The Motley Fool