In her book “Rich Enough? A Laid-Back Guide for Every Kiwi,” “New Zealand’s Most Trusted Money Expert” Mary Holm points out that there are only three ways to get more money into your savings account: Earn more, save more, and be smarter about your savings. She urges people to start saving now, even if it’s only a little bit. The sooner you begin, regardless how small, the better off you’ll be in the future. But the first place to start with savings and credit cards is high interest debt.

Pay Down Credit Cards

If you have more than one credit card, you should know which one charges the highest interest and which the least. This way you can choose to put your little bit more savings towards the highest interest and make it most effective. If you can’t pay them off in full, you want your money to reduce the amount you owe now, and the interest that you would be paying in the future. If one credit card charges 20 percent interest, and another charges 10 percent, you’re better off putting as much as you can into the 20 percent interest card and only paying the minimum for the 10 percent card. (Be sure to pay the minimum to avoid late fees and additional charges.)

If you have the opportunity to choose between savings and paying off your credit card, pay off your credit card. It’s like an investment with a 20 percent (whatever its interest rate is) return on investment (ROI). It’s important to do your best to pay it down and to seek help when you need it.

Become a Credit Winner

While most financial advisors will urge you to cut up your credit cards, Holm says you should instead embrace the habits that make you a credit winner. Credit cards can be useful in an emergency to buy something you need. She emphasizes that “need” is different than “want.” If you manage your credit cards carefully, you can improve your financial standing a little bit at a time.

Once you pay your credit cards off in full the first time, you need to keep them paid off. For some people, this is the hard part. If you can manage it, you’ll get a free monthly loan (in essence) from your credit card. That money can be earning interest, even if it’s a small amount. Just don’t get caught not paying off the card, and don’t switch the debt from one card to another to get the most from your savings and credit cards.

Read what Holm says about Wealth and Happiness.
Read what Holm says about SMART financial goals.