What do the words “financial responsibility” mean to you? Other than just being an irksome pair of words strung together, being financially responsible is synonymous with living within your means. Practicing frugality on a routine basis does not categorize you as financially responsible and inversely, spending your paycheck in a single weekend does not necessarily label you as financially irresponsible. At its core, living within your means is defined as spending less than you make!


Credit Cards and Debt

When determining what financially sound practices truly are, the subject of credit cards and debt is at the forefront. Sorry to say, but if you’re really looking to be financially responsible, being able to only make your minimum credit card payment does not cut it. The sheer inability to pay a credit card payment in full is telling that you might just be spending more than you should. Responsible use of credit is habitually paying off your balance in full and in a timely manner.

For those financially responsible individuals, credit cards should be used for convenience, building strong credit, and rewards. At a surface level, credit cards reduce the amount of bills you need to haul around and provide a safer option than carrying large sums of money. Paying your credit balance off consistently demonstrates that you can make good on your payments, which in turn can improve your credit score – and let’s not forget the potential rewards that can result from good money practices. On the other hand, if you’re using your credit card to get by day to day or for emergencies, you may need to reconsider your budgeting.


Interest Payment

In a similar vein, paying interest alone on something signifies that you were unable to make a payment in full at the onset of the purchase. When the interest payments are factored into the equation, you are spending more to procure the item than the item’s manufacturer thought it was worth. Aside from big ticket purchases such as a car or a home, avoiding interest is a component of achieving financial responsibility.

As most of us weren’t blessed with an inexhaustible trust fund, spending your income the moment it’s received is not advisable. Saving is an activity that requires long-term dedication. Financial planners suggest a 10% savings amount to each paycheck. A good way to go about reserving this sum is to do so immediately after receiving income (if not requesting your employer to take that amount and place it within another account themselves).


Consider investing, it might just be the most profitable choice. Sure it’s a risk, but with a mapped out plan of action, it can be a calculated risk. Examine asset allocation strategies to learn the best mix of securities for your investing strategies. Contribute to your employer-sponsored savings plan if offered. Once your investments are set in place, be sure to monitor growth to ascertain what kind of progress is being made.

At the end of the day, being “financially responsible” means living within your means, irrespective of how much you have or make. Reevaluating your money trends is always a financially responsible decision. Perpetuate good money habits, make adjustments where needed, and you’ll be on you way to financial responsibility.