Maybe you’re hit with an unexpected vet’s bill. Maybe your car starts screaming out for gas two days before payday. Whatever the case, sometimes taking out a cash advance is the only way to make it to your next paycheck in one piece.
And although cash advances can generally be the safest option in terms of interest rates (especially if you have bad credit), you still have to use cash advance services consciously to avoid becoming over-reliant on them.
Luckily, Cleo is the money app designed to help you eventually not need cash advances. So in this article, we’ve got some money management advice that you can use to build good financial habits and avoid taking out a cash advance in the future.
- Tracking your spending
- Creating and sticking to a budget
- Building an emergency fund
- Paying off debt
- Staying motivated
…With a little help from Cleo’s free budgeting features. Because it’s 2023. We’re not using Excel for budgeting anymore.
#1 Track Your Spending
Tracking your spending is the first step towards financial health. This is because it gives you a picture of your financial situation as a whole. Once you’ve got this, you can start making changes to how you spend and save your money.
After you download Cleo for free, you’ll be asked to connect your main bank account. Don’t worry, you won’t be charged. Our super smart AI just uses this information to sort and categorize your spending. Then you can go back and make sure all the categories are correct.
At this point, you’ll be able to see exactly where your money is escaping to each month. So you can:
- Discover that subscription service you could swear you canceled in 2019
- See exactly how much you spent on Uber last month
- Use this information to make better money decisions, like redirecting that Uber money towards your savings account
#2 Create and Stick to a Budget
Now you have your spending categories, Cleo will create you a budget personalized to your specific needs. A budget is a plan that helps you track your income and expenses, allowing you to make better financial decisions.
Here’s how it works:
- Get connected 🤝 – download the app, sign up, and connect your main checking account. Select the Budget tab, then under Next Steps you’ll just need to tap on each icon to customize:
2. Income 💸 – select your latest paycheck(s) so Cleo knows when you get paid
3. Bills 👀 – add your bills and double-check to see if they’re right so they can be tracked correctly
4. Spend limit 🥡 – set a realistic spend limit
🔒 Once you’re done customizing your cute budget, you’ll unlock your ‘left to spend’ and ‘left per day’ amount. So you can resume hitting up Starbucks, without The Guilt hanging over you.
Sticking to a budget is also crucial. So Cleo will call you out when you’re about to hit a spending limit.
As you go, you can adjust your budget to suit your needs. It’s all about setting realistic goals.
#3 Build an Emergency Fund
Ok, this one is perhaps the most important for avoiding cash advances. Building an emergency fund. But you can’t get to this point without steps 1 and 2. Once you’ve tracked your spending and built a budget, you can see how much you’ve got to work with each month after your essential spends.
With discovering that subscription you forgot to cancel and cutting down on your Uber spending, you might even loosen up a little cash you didn’t realize you had.
You should aim to save three to six months worth of expenses for an emergency fund. If this sounds super hard to achieve right now, start small. Maybe you can save $50 a month at first.
Once you’ve decided the amount of money you can save per month, Cleo will make your savings automatic.
If you have Auto-Saving turned on, Cleo will aim to move money to your Wallet once a week, on a Thursday. She will send you a notification on Wednesday if she thinks you can afford to put money in your Wallet, and the transfer will be made the following day unless you decline the saving.
#4 Pay off debt
We’ve put this one after building an emergency fund for a reason. Of course, if you pay off your debts, you’ll free up more cash to use as a safety fund for emergencies.
But it all depends on your particular financial situation whether you feel that this is something you can prioritize right now.
Maybe you feel as though you already have your debt payments down and are paying as much as possible towards them. In which case, keep this going and work with the first two steps to build some kind of emergency fund. Killing it.
If you feel like you could take another look at the way you’re paying your debts, check out the article our financial advisor Anna Yen wrote on paying off credit card debt. It has all sorts of useful information that is transferable for other types of debt payment, like explainers on the Snowball Method and the Avalanche Method.
#5 Stay Motivated
If you’re working on your relationship with money, you’re literally re-wiring the way your brain works. It’s big stuff.
And if you’re working towards a significant money goal, it can be easy to lose track of all the progress you’re making along the way.
If you type “hype me” into the chat, Cleo will hype you for all the good stuff you’re doing and progress you’re making money-wise.
And if motivation requires a little more, let’s say, tough love, for you, type “roast me” into the chat (if you dare).
There’s only one thing left to do…
Enjoy this post? Give it a share or send it along to a friend. You never know, it could make a big difference. Big love. Cleo 💙