7 Good Financial Habits to Master

7 Good Financial Habits to Master
Key Takeaways:
  • It's not hard to change your habits to enjoy greater financial security.
  • Just say no to excess spending and live within your means.
  • Make savings automatic to avoid overspending.

Habits: everyone has them, whether you’re conscious of them or not. This is especially true with money. Many of us habitually do things that can harm our finances without realizing it. If you eat out more than you need to, buy things on impulse, or only make minimum payments on your credit cards, you could be putting your finances at risk. To improve your finances, it’s critical to start developing good financial habits, and get rid of as many damaging financial habits as possible.

The good news is that this doesn’t have to be a difficult process. Small things add up and you’ll be surprised how quickly you can change a habit. Here are seven simple things you can start doing today that will put you on a path to financial security.

1. Live within your means

This is the most crucial of all good financial habits! If you’re consistently spending more than your income, you will be living paycheck to paycheck forever. Figure out exactly how much income you make every month and make a budget so that your necessary spending remains below that amount. Don’t use credit cards to expand your pocketbook. A credit card is essentially a loan, and if you have to take out a loan to make a purchase, you can’t actually afford it.

2. Schedule a regular financial check-in

It’s hard to know what your habits are if you’re not keeping track of your accounts. You should schedule a regular, recurring check-in time with yourself so you can keep tabs on every financial move you make.

Ideally, you should check your credit score at least once a quarter, and your checking account every day. If daily check-ins are too intimidating at first, try once a week to start. Once you get more comfortable seeing how things are going, see if you can make that financial check-in more frequently. Notice a recurring expenditure you don’t really use? Cancel it and pat yourself on the back.

3. Make your savings automatic

Every time you get paid, set aside a portion of your paycheck to automatically go directly into savings. If you get direct deposit from your employer, you can set this up through them. Otherwise, you can set up an automatic transfer with your bank.

If you think your budget can handle it, try to put 10% of every paycheck into savings. If that’s too much to handle, that’s ok. Even a small amount, say $10 a paycheck, will start to add up over time. As your savings grow, see if you can bump up the amount you’re putting in and allow it to grow even faster. Challenging yourself to save just one percentage point more per paycheck every year can lead to greater financial security.

4. Re-evaluate your spending habits

Take stock of your expenses by tracking what you spend for a couple weeks. Note the frivolous expenditures you can cut out, cancel subscriptions you don’t use, cut back on restaurant meals, and start packing leftovers for the next day’s lunch every night before bed. Shop thrift stores and look for big purchases like home appliances on Craigslist before buying new. Just because something is used doesn’t mean it isn’t still useful, valuable and beautiful. A savvy shopper with good financial habits will soon learn how to never pay full price for anything.

5. Learn to say “no” to yourself

Impulse purchases, like the tempting things you see in the store checkout line, can really harm your finances. You’re in charge, though, and can train yourself to say “no” to these kinds of purchases. Always shop with a list of what you need and stick to that list. Build in a buffer of consideration before you make any purchase. If you’re in a store and see something you want, but don’t actually need, challenge yourself to resist putting it in your cart for 15 minutes. You might be able to walk right out of the store with the desired item dissipating from your memory. When browsing online, step away and forget about the item for at least 24 hours. Pushing yourself to stop and think can go a long way towards ensuring your purchases are sound.

6. Set reminders or autopay

Late fees can rack up unnecessary debt very quickly. Avoid compounding your debt by setting calendar reminders to pay your recurring bills. Even better, link your bill accounts to your bank account or debit card by setting up autopay. Autopay is great because it allows you to just “set it and forget it,” and never pay another late fee again. Just always make sure you have sufficient funds in the account you’re paying from, or else you could get charged overdraft fees from your bank.

7. Read financial advice

There’s a plethora of great financial advice out there if you just take the time to look. The fact that you’re here reading this list is a great indicator that you’re thirsty for more money knowledge. Do some research and find more personal finance blogs to read (start with ours) and search your local library for books that advise on personal finance both broadly and on specific topics. Find one or two that speak to you and check out what they have to say.

The impact of these habits won’t happen overnight, but if you stick with them the effects will snowball overtime. Seeing results can be a great encouragement to keep going, and the more good financial habits you integrate into your life, the faster you will see those results.

Use your good habits to get out of debt

Building those healthy money management habits is such a crucial part of your overall financial wellbeing. To help with other aspects, like dealing with debt and planning for your future, we’ve developed a simple to follow guide that can help you find the tools you need to move to a better financial future. Get started by downloading our free guide right now.

Learn More

Recommended Reads