I have to confess, many of my money habits and other organizational routines have their foundation in me being lazy.
I don’t want to be juggling lots of balls all the time.
I don’t want to have to try and remember a million different things to do every week.
I want to live my life and enjoy it. I want time to myself and time to do things.
I do not want to always be thinking I have jobs to do. Especially jobs I might not like doing.
And who loves doing their finances every day, week, or month?
Good v Bad Money Habits
Habits help you live your life that little bit more organized. You don’t have to think too hard because you’re in the habit of doing certain things in certain ways.
Money habits are no different but there are both good and bad habits and you need to know the difference.
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Bad Money Habits To Avoid
Let’s be crystal clear about some of the bad habits you might already have adopted. It’s very easily done, especially when you see other people managing their money the same way.
How about these bad money habits examples for starters:
- You don’t budget
- Buying too many luxuries (because you deserve them?)
- Relying on your credit cards to get through the month
- Giving in to impulse buys all too frequently
- More house than you need
- Not knowing how much you have spent in the past week or so
- You happily pay for convenience
All of these can get you into debt and a lot of it.
Debt not Credit cards
I don’t think of credit cards as ‘credit’, I think of them as ‘debt’ cards. Unless you pay off your bill in full every month then that is exactly what you end up with – DEBT.
All of the bad examples above are easily done. You buy a couple of nice things because you’ve worked hard.
But wait, you don’t have any money left in your account because you don’t have a budget so you pay by credit card.
And working hard means you don’t feel like cooking when you get home so you opt for the convenience of take out, which also goes on your credit card.
It all very quickly adds up to a credit card you can’t pay off and the habit of spending with little thought.
Smart money habits of the rich
If you look at rich people you might be forgiven for thinking that the only reason they are rich is because they earn loads.
Not true, there are many secretly rich people who have money because they have worked hard to be smart with their money. They know that saving money is important and have created good habits when it comes to their money, how they save it and how they spend it.
Simple but smart habits like:
Creating and sticking to a budget
Not splashing the cash
See how simple they are? And how they don’t require you to be rich in order to become your regular habit?
So what are some of the better money habits you could adopt today?
The Best Money Habits To Adopt
If I get into the habit of doing things then that habit becomes ingrained and goes onto autopilot.
- When at work I ate the same (packed) lunch every day. I can make that lunch on autopilot while still half asleep.
- I clean the bathroom on the same day every week
- I wash towels on the same day (weather permitting)
The fact is I am a creature of habit. And the same goes for organizing my finances.
I don’t want monthly tasks which take me hours because a) I’ve got to remember how to do them and b) because there is so much involved.
Give me short, easy and simple.
And these 9 money habits will work the same way for you.
Habits that link into your financial goals help you organize your savings and make your budget a successful one.
1. Pay Yourself First
You are the most important part of your wealth and happiness. But it’s not just about the you today, you need to think about and plan for the future you.
The you in 10 years and 40 years time. The future you needs money and the current you needs to provide it.
After all you deserve it. To have money in the future.
I realize this is quite difficult to get your head round, I know it took me a long while.
But without focusing on your future self you run the real risk of getting stuck in the have it (all) now mindset.
The most important money habit you can adopt right now is to pay yourself first.
It doesn’t matter how you budget your money or how small you start, it’s the fact that you are prioritizing maybe just $10 of today’s money for the future you.
Start small and continually build your savings for your future.
You can thank yourself later.
If saving money right now seems impossible because you have no money have a read of these posts for help and inspiration:
How To Spend Less Money (And Save) – 6 Easy Tricks
Live Cheaply – How You Can Win At Living On Next To Nothing
How To Live Fabulously On A Budget (And Save Money)
2. Say No To Lifestyle Creep
Lifestyle creep is the secret killer of your happiness today. It’s a bad financial habit that so many of use fall into without thinking.
When I started working and earning my own money I thought I would be rich, contented, happy and have everything I wanted if only I earned $5k more than I did then.
Well guess what? It didn’t quite work out like that. I got a promotion and pay rises and increased my lifestyle to match my increased income.
As a result I still wanted a bit more, if only I earned (another) $5k more.
It took me a long time to realize that if I kept my lifestyle at the same level, when I did get a pay rise I could save the extra money.
That way I had options to do different things with my money, rather than it being eaten up in the minutia of daily living.
Don’t increase your lifestyle to match your increased income, save the money and create saving strategies to target that money toward.
3. Have Financial Goals
“If you fail to plan, you plan to fail”
Was a quote drummed into Mr2p when he was serving in the armed forces. And it has served us both well.
We planned to pay off our mortgage early and we did. We planned to save money into Mr2p’s retirement pot and we did.
Create a plan for your money and financial goals. Short term ones like saving for a vacation, and longer term ones like paying off your mortgage quickly.
Having financial goals helps you to be better with money by focusing your spending on the things that matter to you.
You are less tempted to waste money if you know you have a better option for your money.
Always have a plan (goal) for your money.
Grab your copy of the free money saving mini bundle and start creating new habits today
4. Use The 30 Day Rule
The 30 day rule is all about getting out of the bad money habits of impulsive spending and over spending. It’s not about stopping yourself from spending any money.
It’s about waiting, considering and thinking about whether spending your money on something you think you want is actually the right thing for you to do.
When you’ve got goals for your money and a budget, giving yourself breathing space to consider whether the item you have impulsively thought about buying actually fits in with those goals is a very sensible thing to do.
By all means buy that item later, but press pause for 30 days and check that it aligns with your values and doesn’t knock your budget out.
Stop impulse spending by delaying purchases.
5. Avoid Bad Debt
I’d love to tell you that you should avoid all debt period. And that all debt is bad. But let’s be realistic, it’s not feasible for most of us is it? Some debt is bad, but some is good, when it’s done right.
Student loans can be good, as long as you get them for the right reasons and pay them off.
Mortgages can be good, as long as you are not re-mortgaging to pay off bad debt or taking on too big a mortgage.
Bad debt is things like car finance, credit cards, overdrafts and gambling debts.
If you think you could never fall into the trap of gambling please do read MissManyPennies cautionary tale. I salute her for her openness in sharing her story.
It would be nice if you could avoid all debt completely but in today’s world you will struggle to buy your own home without a mortgage and struggle to get a decent education without some form of student debt.
Avoiding all bad debt is the good money habit you want to adopt and never drop.
Sinking Funds For Beginners: What You Need To Know
23 Reasons You Are Stuck Being Broke And How To Fix It
6. Check Finances Regularly
Being focused on your money is key to knowing where you are with your budget, your savings goals and your plans for the future.
Checking your finances regularly keeps your focus. I mean checking every account that has some form of money activity going on.
Track your spending so you always know exactly what you have spent and on what.
Don’t wait for your credit card bill to land in your inbox before you know how much the balance is.
Check on a very regular basis what you are spending, how much and on what.
You should never have any surprises when you check your accounts, even if they are joint with your partner.
Checking regularly helps you identify and nip in the bud any overspend that has crept in.
Related post: 7 Things To Do At The Beginning Of Every Month For Your Money
Track your spending so you always know exactly what you have spent.
7. Say No
I might sound like a bit of a weirdo when I say that you should be saying no to yourself on a very regular basis.
Saying no grounds you.
It stops you building an entitlement mentality, one where you convince yourself you should buy something because you deserve it.
I can’t tell you the number of times I have had a silent conversation with myself about popping out to the shops at lunchtime to ‘treat’ myself.
I already had my lunch, snacks and drinks so I needed nothing. But I wanted something.
Saying no meant that I kept to my no spending at work plan and stopped the slide back into bad old habits creeping in and destroying my budget.
Set your personal spending rules out and ensure you say no to yourself when you have a weak moment.
8. Use Only Cash or Debit Card
When you are trying to get your life and finances more organized I am a great advocate of keeping things simple.
- Have one account and one debit card you spend on.
- Use cash where you can.
- Don’t use credit cards.
When you use cash there is less risk of overspending. Using a debit card that is linked to your main bank account means you can only spend what you have in that account (no overdrafts please!).
I rarely use my credit card for everyday or face to face purchases. Yes, I might miss out on 0.05% cashback.
But I’d rather do that and not overspend than be faced with a big bill that I hadn’t realized had added up quite so quickly during the month.
When I’ve had tight times I have resorted to using the cash envelope system. Using cash means you literally cannot overspend.
And it’s a good financial habit to adopt to keep you in control of your money.
Don’t use credit cards, use cash or debit cards.
9. Automate Your Savings
Life is so much easier when you plan ahead.
Meal planning helps you know exactly what you are going to need to buy at the store, what you need to cook and what you will be eating.
Likewise, automating all your savings means you have less to think about. If you want to save for a vacation then save for it every month.
That way not only do you not need to think about it, it will cost less because it is spread over 12 months.
Set up automatic payments into a savings account.
And it’s not just cash savings that you should automate. In the long term you need to be investing your money not just saving into a standard savings account. And doing so regularly and automatically.
I know the idea of investing and investments might seem too hard or too scary. Believe me, I put off doing any form of investments for years. And had to save doubly hard to make up for the years I didn’t invest.
My secret tip: Get comfortable with the idea of investing by using a
Acorns is a really simple way to dip your toes into investing, and save money, without even thinking about it. I think the best part is this hands off automated service costs as little as $1 a month.
Acorns automated roundups make saving and investing unbelievably easy, you’ll be pleasantly surprised how quickly your spare change accumulates.
9 Regular Money Habits For Life
So when should you be focusing on working up your new financial routine?
Is it enough to do them once a month?
Or do you need to be doing them every single day?
Some money habits lend themselves to being done monthly. Others are best done as often as you feel comfortable.
Here’s my suggested timescales for these money habits to get them ingrained into your psyche to maximize their impact on your wealth and happiness.
Daily Money Habits
Record your spending – So you can track how you are doing against your budget. I track my spending using a very basic spreadsheet and have done for years now.
Focus on saying no for casual spends – Use no spend days to help you reduce unconscious spending.
Weekly Money Habits
Check your finances – Log in to all your accounts including credit cards, update your spending tracker and make sure the activity on your accounts is as expected. Doing so can also help you identify fraud quickly.
Check your spending against your planned budget – If you are having a spendy week or month, consider switching to cash envelopes until you are next paid.
Meal plan – planning what meals you have and therefore what ingredients you buy will directly impact your grocery budget. Create a new weekly routine to maximize your savings.
Monthly Money Habits
Review last months spending – Analyze your over and under-spends. How can these inform next months purchases?
Revise your budget for the month ahead – check what income you will have coming in, any irregular bills due and tweak your budget accordingly.
Check your progress toward your financial goals – and tweak your saving strategies accordingly.
Allocate overtime or pay rises received – to one of your financial goals or put toward your future self
Money Equals Happiness
“Money can’t buy happiness, but it can make you awfully comfortable while you’re being miserable”Clare Boothe Luce
We all know money can’t buy you happiness in of itself, but done the right way you can create happiness through the choices you make with the money you have.
Being broke doesn’t mean you are destined to be miserable in the same way being rich doesn’t guarantee delight.
Related post: 11 Simple Things That Rich People Do (And So Can You)
Having a good routine for your money with how you spend and organize it takes the pressure off.
It frees you up to concentrate on the things that truly bring you happiness.
Better Money Habits
Adopting these simple money habits will stop you from worrying about money, help you focus on your future and build your wealth.
Money can’t buy you happiness but having a well thought out plan for your money and goals for your future will go a long way to helping you be happy.
So start these new routines today and get busy living and loving life.
Grab your copy of the free money saving mini bundle and start your money habits today
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Last Updated on 22nd August 2021 by Emma
4 thoughts on “9 Great Money Habits To Transform Your Finances”
All good habits. Be frugal, save, and invest is the constant theme to build wealth.
Hi DP, completely agree. Building wealth requires discipline over a long period of time. Live below your means and save the rest. Thanks for stopping by!
Hi Mary! Many thanks for reading and commenting!