Money is like air. You need it to live. It’s what you do with your money that is important. And nothing is more important than your ‘money habits’. These being the smaller things you do on a regular basis that ensures your hard-earned money is working for you.
Creating (and sticking to) sensible money habits will affect many areas of your life, ultimately making you feel more secure, content and even happier.
Here are some simple, yet highly-effective money habits that we suggest you introduce into your life.
Financial habits that will make your life easier
1. Track your spending
This is top of the list for a reason. We can’t stress enough the importance of tracking your spending. Don’t be put off by thoughts of complicated Excel spreadsheets. Tracking can be as simple as a weekly ‘money-in, money-out’ list or a quick look at your online banking. A great tip is to withdraw the amount of cash you have to spend from the bank each week and live within that amount. Easy. Whatever way you choose to track your spending, you will become more aware of where your money is going and are less likely to overspend.
2. Consider credit cards carefully
Do you have a credit card? Do you really need a credit card? Would life be simpler, easier and cheaper without one? In most cases, yes. If you want something, we recommend you save for it, then buy it. Putting purchases ‘on the card’ can increase the risk of debt distress if you get behind with your payments or get blinded by sneaky hidden fees. Plus, you are more likely to overspend with the lure of your plastic playmate. Credit cards are for the finically disciplined. If that isn’t you, steer clear.
3. Save a portion of what you earn
It doesn’t matter which money guru you turn too, they all say it: Put aside a percentage of everything you earn as savings. Like the guru, the percentage may vary, but we believe it’s a personal thing. Basically, work out what you can afford to save every payday once bills and living expenses are deducted. Then, have that amount automatically paid into a high-interest savings account. Not only will it add up and be a lovely surprise when you look in 6 months-time, but you get that ‘feel good’ (and slightly smug) feeling knowing you are building your wealth.
4. Learn to love automated banking
The best habits are the ones that require little effort, and when it come to your finances, automated banking is the star of the show. Having your bank accounts moving your money while you chill and watch Netflix is the best! Set-up will take about 30-minutes and involves you creating online accounts for designated finances, such as ‘bills’, ‘living expenses’ and ‘savings’, with periodic payments going to/from them. Knowing you have the right money in the right place at any one time is a huge weight-off and frees-up time to enjoy life.
5. Prepare for bills
If there’s one thing we know, it’s that the bills keep coming. And in most cases, we know roughly the amount they will be, which makes it super-easy to prepare for them. This can be done in a variety of ways. An easy one is to open a bank account for bill payments only and pay into it periodically to ensure there is enough to cover outgoings. Missing bills or paying them late will incur costly fees that can be easily avoided with this simple money habit. Oh, and paying them early can save you a substantial amount, so that is definitely something to aim for.
6. Don’t try and keep up with the Jones’s
By this we mean, forget what other people are doing with their money and concentrate on your own. Just because your neighbours have proudly parked the latest Audi in their front drive for all to see, doesn’t mean a brand-new car is the right financial move for you (more than likely, it wasn’t for them either). You are much better being debt-free, having savings and living within your means than competing with the Jones’s and stressing-out over car repayments just to look good.
7. Eliminate your bad money habits
We all have bad money habits. By their very nature of being ‘habits’ they fit so comfortably into your world that you’re not aware of them. Now is the time to seek them out and quash them. Common bad money habits revolve around personal vices such as eating, drinking and gambling. Others can be impulse buying, abusing the credit card or simply not thinking through your purchases. Nipping these negative money habits in the bud will save you money and could even improve your quality of life.