Although you may have ambitious plans with your money, bad habits can stand between you and your goals. However, creating good money habits can make all the difference between financial success and failure.
Sure, creating the right money habits will take time, but eventually, they’ll become second nature, helping you achieve even your most ambitious goals. With that being said, here are a few of the most critical money habits to develop to help you reach your goals and find more financial success.
Best Money Habits to Adopt for Financial Success
Create a budget and commit to it. Budgeting is a good money habit that gives you control over your finances. It is a plan for how you intend to spend your money every month. The most popular budget-planning ways include:
- Budgeting apps
- The 30-30-30-10 rule
- Online cash envelopes
- The 50/30//20 rule. 50 percent of your income goes to necessities, 30 percent goes to wants, and 20 percent goes to your debt or savings
- 60-30-10 budgeting
If you are unsure, consider trying a few options before settling for one. The goal is to find a budgeting technique that works for you.
Unplanned purchases may be fun, but they will cost you heavily in the long run. Create a list and stick to it when you plan to get a few items from the drugstore. Be sure of the amount you wish to spend and whether you can afford to make a few adjustments. This way, you get everything you want without falling into the trap of impulse buying.
Even the most minor unplanned purchases can add up and get you off track over time. The same applies to online purchases. Before opening your favorite online store, figure out what you want and create a budget.
A great financial habit to hone, is to create clear financial goals. If you don’t have clear financial goals, you have nothing to work towards. Having goals is one of the most crucial money habits.
Saying you wish to save money isn’t enough. You must attach specific numbers and timelines to your goals. You also have to attach some action to your ambition. Try making your financial goals as detailed as possible. Here are a few essential questions to ask when setting your financial goals:
- How much money can you afford to put towards your goals every month?
- Do you have a way of measuring your progress?
- Can you find extra money in your budget to help speed progress for your goals?
- What are your time limits?
Related: Smart Moves for Financial Success
Invest in consistent financial education even if you don’t think you need it. No matter how disciplined you think you may be, there’s always something new to learn. According to Kenneth Boyd, an expert from AIS-CPA, taking a financial crash course is a great idea.
However, you don’t need to go that far. The internet has many helpful resources that may help you accomplish your financial goals. Read finance websites and blogs, listen to finance podcasts, and learn from those around you.
One of the best ways to avoid overspending is by creating a budget. However, if the goal is to grow your savings, always pay yourself first. When you get your paycheck, the first thing you should do is put a specified amount towards savings.
Create your budget with whatever is left. If you wait to pay yourself after settling your bills, you may not have enough left to meet your financial goals.
With that being said, a simple and effective way to get this good habit started, is to set up an auto-transfer of a specified amount of money into your savings account(s) to make this possible.
Trying to save in all aspects of your life can be challenging. If you are always looking for opportunities to save, it may feel like you are spreading yourself too thin. It would be easier to commit to saving in specific areas.
Start with the easy steps. If you spend a lot on redundant things, cut back. Easy wins will motivate you to keep going. If, for example, you have recently joined your local sports league, it may be okay to give up your gym membership. If you have been going out for brunch every weekend and can’t imagine giving it up, save on your grocery shopping. You don’t need to save on everything at the same time.
Tracking your spending isn’t as simple as it may sound. It isn’t surprising that 65 percent of Americans can’t explain what they spend on every month. This is a money habit that you need to ditch immediately. Start tracking every dollar. It is the only way to know what needs to change. Here are a few tips to keep track of your spending:
- Use a spreadsheet to record your expenses
- Use tracking software
- Write everything down
Related: Retire Young by Tracking This
Identify opportunities to increase your income and take advantage of them. Making the most of what you already have is essential, but it is crucial to strive to get more.
Increasing your income will ultimately give you more flexibility and freedom. And when you have more income, saving and budgeting becomes easier. In addition, when you increase your income, you’ll simultaneously be creating a safety net around your initial financial goals by minimizing the chances of spreading yourself too thin.
Tracking your progress motivates you to keep pursuing your financial goals. Take some time every month to see how much you have accomplished. How much have you saved? How much debt have you paid off? What can you do better? If you have been saving for something, keep track of how close you are getting to it. Seeing results does not only boost your motivation. It also points out what you need to do better.
10. Review Your Plan Regularly
Out of all of the good money habits mentioned, this last one can’t be recommended enough. Why? Because having a plan for your finances is great, but it isn’t enough. You must review and update your plan to suit your changing financial needs and lifestyle.
The plan should help in assessing, planning, and improving your current and future financial life. With that being said, it would be wise to review your plan once every six months or whenever you make significant life changes.
There you have it, the top 10 money habits you should adopt to increase your financial success.
Developing the proper money habits will propel you into a richer, more fulfilling life. It can also help you meet your financial goals. While bad money habits will leave you struggling and in debt. So, employ these good money habits and you’ll be well on your way towards creating a brighter financial future for yourself.
Till next time,
PS – If you enjoyed this article on some good money habits you should adopt, then you’ll love this post on the best money quotes of all-time. Why? Because they will help you strengthen your money mindset. And a stronger money mindset leads better money management.