Want to be financially responsible? Do these five things

What Does It Mean to be Financially Responsible?

Being financially responsible means you manage your money to lead to financial stability and security for you and your family. You stick to a budget, live within your means, pay bills on time, avoid debt, prepare for financial emergencies, and save for the future.


Do you save regularly?

Saving is the way to get the things you want in life, from a holiday or a home, to a comfortable retirement. It also provides a fund to cover emergencies, so a hefty repair bill or unexpected medical costs won’t force you into debt.

US Senator Elizabeth Warren endorsed the popular saving habit of putting aside at least 20% of your income every month, as part of the ‘’. Essentially, the rule suggests you divide your post-tax income into needs, wants and savings. If that’s not possible right now, you can start slowly. Even $10 a week will give you more than $500 after a year, not counting any interest that amount might earn.

Seeing your savings grow is a good feeling. It might even inspire you to save more by earning extra money or cutting back on your spending. And, every time your financial situation improves, you can increase the percentage of income you’re saving.

Pay Yourself First

This can seem like an impossible piece of advice, especially if you are living on a strict budget, but it’s vastly important. Putting it simply, paying yourself first means that every single month–or paycheck–set aside money to save. Do this before paying any bills or before any discretionary spends.

You can tuck these funds away in your nest egg, your rainy-day fund, or your retirement account. You can also pay yourself first to cover larger spending, like paying for home repairs or sending your child to summer camp. Allocating these funds to a larger goal the moment they hit your account will prevent you from spending that money unnecessarily or on things you don’t need.

A Very Personal Definition

Does being financially responsible mean that you have to scrimp and save? Maybe, but only if that is what it takes to stay out of debt. On the other hand, if you are the Sultan of Brunei, you may easily be able to afford a jet, a mega-yacht, a mansion in the South of France and a few palaces. Although those of us with lesser means might frown on this extravagance, it shouldn't be confused with a lack of financial responsibility. After all, there's nothing irresponsible about buying things you can afford to pay for.

Does your budget separate needs from wants?

You need new shoes but you want an expensive pair. Should you stick to the cheaper ones? The answer – “Not necessarily” – might surprise you.

When you’re drawing up your budget, needs come first – the things that enable you to live and work. Then come savings. Once those are covered… the rest can be yours to spend as you like.

So, if you decide to go without other luxuries such as eating out or trips to the cinema until you have enough money for the shoes, go ahead and enjoy them.

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4. Always Pay Your Bills on Time

Students waste millions of dollars each year on late fees and penalties. Through the use of online bill-pay tools and other bill-pay services, a student can be assured that they will pay their bills on time.

Plus, being late on your bill payments is the most common reason college students have poor credit scores. If you want to get a good interest rate on a loan, or even be able to rent a nice apartment, you have to have a good credit score.

7. Dont Spend a Fortune on Housing

Next to tuition, housing is the biggest expense that a student has each year. While it may be more comfortable to live in an off-campus apartment, these cost thousands of dollars extra every year, which can lead to an accumulation of debt.

Even if you live off campus, consider getting a roommate or look into house hacking. These are great ways to minimize the cost of housing.


As we discussed up top, financial responsibility is about more than simply paying for yourself. It’s also about taking care of the people who depend on you.

Don’t Make Commitments You Can't Keep

A little over a year ago I signed a contract subleasing my apartment to a woman who had just taken over as the head of a local nonprofit. She and her family were moving to Ann Arbor while my wife and I were moving out, so it seemed like an excellent fit. Then she changed her mind. She and her husband got to town, decided they didn’t want our apartment anymore, and announced that there was nothing I could do to change her mind.

Do Not Do This:

It doesn’t matter how large or small, never make a financial promise you don’t intend to keep. Don’t borrow money unless you are certain you can pay it back. Don’t hire someone unless you have the money sitting in your bank account. And never, ever assume financial responsibility for someone unless you have the means to do so.

This comes up more often than you might think. In fact, we all do this kind of thing often. We make a promise to someone else because it’s easier than saying no, or because they catch us in a fit of generosity. This is fine if you intend to follow through, but only if. Otherwise you will create more problems by breaking your promise than if you’d never made it at all.

Worse, not everyone will simply let you off the hook. To this day I have a $7,000 lawsuit sitting in my desk drawer. I haven’t decided whether to go back out to Michigan and collect my money, but there is one thing that is certain: You should never put yourself in the position to find out from someone else.

Prioritize the People Who Count on You

When you build your budget, prioritize two things: First, your immediate needs. This may sound selfish, but the truth is that you’re no good to anyone if you go hungry, leave an infected tooth untreated or let your car get repossessed. Keep yourself functional and available and spend the money necessary to meet those needs. (This includes your retirement contributions, otherwise you’ll become someone else’s problem in 40 years.)

Then prioritize the people who depend on you. If you have children, aging relatives, a nonworking spouse or any other financially dependent individuals, take care of them before you prioritize any nonessentials. Buy your kid that bike before you budget yourself a new pair of shoes. Make repairs to your grandparents’ home before moving into a larger apartment.

Financial responsibility is about more than just income-exceeds-expenses. It’s about keeping your promises.

Dont Keep Up with the Joneses

Financial responsibly means doing what you have to do to take care of your needs and the needs of your family. To make this happen, your focus should be internal. The neighbors aren’t paying your bills, so their spending habits shouldn’t dictate yours or set the bar for your standard of living.

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Jerry Graham Jerry is a personal finance enthusiast who began his career in private banking. He worked in the mutual fund industry before going back to school to study MIS. He currently works for a software company. He enjoys camping, eating keto, making extra money through freelancing, and trying out various gig economy side hustles.


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