No matter whether you’re beginning to get your finances together, or you’ve got your finances together more than Warren Buffet, creating good financial habits helps set you up for success in life. To help you get started, here are 40+ financial habits to develop.
My advice would be to not try all of these at once. Pick one or two of these habits, and start there. If you can get one of these new habits to coincide with a habit you already have, that will make it much easier to transition. For example, if you want to start getting better at budgeting when you sit down and plan out the following week, also write up an outline of your budget for the next week.
Once you have your financial habit you’d like to develop, take small steps towards achieving it. Make sure you have a plan set up for anything that may become an obstacle. Back to our budgeting example, if you’re setting up a budget for the first time, it’s best to do it when it’s quiet and the kids aren’t around or at least napping.
Create an accountability system. I personally love trackers! There’s something about coloring in a square to mark that I met that small goal that’s very satisfying. When I reach a milestone, such as a month of no spending, I reward myself with a small prize, such as a chai tea at Starbucks, or Lo Mein from the local Chinese restaurant.
And don’t get discouraged if you’re not making strides towards these habits right away. While it can take 60+ days to make a new habit, it can take up to 200 days if you’re trying to change an old habit for a new one.
1. Stop Ignoring You Finances
When you ignore your finances, you’re setting yourself up for failure. To make sure that you’re reaching your goals for life, whether it’s buying a house, an RV, or simply being financially independent, you need to start keeping track of your finances.
2. Get Organized!
The best way to make sure you’re on top of your finances is to start organizing them. This includes keeping a budget planner or binder and having a filing system in place for any important financial documents that need to be kept.
3. Plan For Emergencies
Whether we like to admit it or not, emergencies happen. Having a plan in place for when they occur will save you money in the long run.
4. Create & Maintain An Emergency Fund
On top of a plan for any emergencies that may happen, having an emergency fund in place gives you the security of knowing that no matter what unexpected expenses come your way, you’ll be able to handle them. This can include replacing appliances, costly car repairs, or any medical bills that are higher than expected. And most importantly, do NOT tap into it for non-emergency expenses.
5. Set Up A Budget
Set your budget. Keep it simple by tracking your income and your expenses. Don’t forget to include savings. Most importantly, keep it simple and reasonable! The more complex or unreasonable your budget is, the harder time you’ll have sticking to it.
I love using the You Need A Budget* method, I prefer to keep a paper copy of our budget. It helps you get to the root of your financial priorities and commitments, and in turn, simplifies your budget. If you prefer to budget digitally, their online budgeting software* makes it super easy to start your budget, and even start fresh if you need to! It does come at a cost of $84 per year, but in my opinion, if it keeps you on budget, it’s well worth it! If you’d like to try their method, you can get a free month of YNAB by signing up here*.
You can grab your copy of the budget workbook I use here!
6. Pay Yourself First
Don’t forget to pay yourself first. Whether it’s through sinking funds, savings goals, any investments or retirement contributions, paying your future self first ensures that you’ll be financially secure for whatever your future holds.
Need help in reaching savings goals? Check out this post on how to reach your savings goals, and get our free 52-week savings tracker.
7. Max Out Retirement
Maxing out your retirement contributions can help speed up your savings goals, allowing you to reach them faster and retire earlier. If you’re still paying off debt, you can cut out retirement contributions completely until you’re done paying debt, or you can keep contributions to your company match. Every situation is unique! Don’t be afraid to run some possible scenarios to see which works better for you in the long run.
8. Spend Less Than You Earn
Whether you are spending more than you earn, or spending everything you earn, it isn’t sustainable. To reach financial independence, you need to spend less than you earn, and save the remainder.
9. Create Financial Goals
Creating financial goals helps remind you of what you want to accomplish. Whether it’s becoming debt-free by 40, retiring before 50, or having enough savings in place so your grandchildren don’t have to worry about college expenses, having a goal helps give you something to work towards. Don’t worry about keeping the same goals. Life goes on, situations change, and your goals can change too!
10. Set & Periodically Review Savings Goals
Whether you want to save up for a car, a down payment on a house, or just want to have enough set aside for Christmas gifts, reviewing your progress on your savings goals is vital to helping you achieve financial independence.
11. Save Any Unexpected Money
I know, the first impulse is to go out and spend the money! But remember your long term goals here. The money would do you far better being invested or set into a high-interest savings account. If you’re still paying off debt, using that money as a debt payment can go a long way too, as it’ll save you a lot of money down the road in interest charges.
12. Automate Your Finances
When your money is out of sight, it’s out of mind. By automating your savings, investments and retirement contributions, you won’t miss the money you didn’t see in the first place.
13. Invest Any Extras You Have Left
Nothing is better than making your money work for you! If you’re able to invest, do so, and get your nest egg built for you later down the road.
14. Don’t Overspend On Gifts
Remember, it’s the thought behind the gift that counts more than the price tag! And if your heart is set on a particular gift for someone, shop around or wait for sales. Make sure you’re not just throwing the money out there without getting the best deal.
15. Don’t Impulse Buy
Figure out makes you want to impulse buy, and track those spending habits. Is it a new sweater you saw online? Or a cute pair of boots your friend found, Once you notice a pattern, it’s time to make some changes! Our no-spend tracker is perfect for tracking impulse spending and has room to give you a goal to work towards.
16. Open & Review Bills As Soon As You Receive Them
Not only does it help you remain on top of your budget, but you’ll also be able to spot and appropriately deal with any higher charges in the process.
17. Negotiate Bills For Lower Rates When Possible
If you’re able to, negotiate for lower rates on some of your bills. Sometimes this can be done with credit cards, medical bills, and even utility bills.
18. Pay Bills On Time
Not only does this leave you in good standing with your service provider, but it can also give you some leeway if you’re negotiating for lower rates!
19. Cut Out High-Cost Expenses
Inevitably, there is always one expense we have that is through the roof. Don’t be afraid to find cheaper alternatives to help save money in the long run.
20. Pay Off All Debt
It doesn’t matter whether you use the debt snowball or debt avalanche method, find the best debt payoff strategy for your unique situation. No two debt scenarios are ever the same. Once you’re done paying off your debt, you’ll find you have a lot more money for saving, investing, and spending.
Need help getting started on paying off your debt? Here are 6 simple steps I took to start our debt snowball without straining our finances.
21. Avoid Pay Day Loans
These high-interest rate loans make it nearly impossible to get out from under, so avoid them if you can!
22. Review Credit Card & Bank Statements Monthly
By reviewing your statements monthly, you can see any potential spending habits that you need to keep in check {is your eating out habit becoming too costly?}. Also, you can confront any mistakes or fraudulent charges on your statements.
23. Ignore Your Raise
If your budget is balanced, then your regular income should be able to cover all your expenses. Put any of the extra money you make towards debt or into saving and investing. The same goes for any overtime money you make. By putting all the extra money towards your savings goals, you’ll be able to reach your goals faster!
24. Meal Plan & Cook At Home
This is where we save the biggest. Monthly meal planning helps give me a rough idea of what we’re making throughout the month for dinners, and it undoubtedly keeps my shopping very streamlined.
25. Set A Grocery Budget
You’ll want to calculate your grocery spending over the last few months and see if it’s a reasonable amount. Don’t worry about what others are spending on their households; no two situations will ever be the same. Just focus on ways to improve yours, like cutting out redundant food purchases, making multiple meals out of one item, and buying store brands.
26. Make A List & Stick To It!
Whether it’s in the grocery store or Target, make a list of what you’ll need, and your budget, and stick to the list! If you’re unable to get everything on your list, either prioritize items by urgency and need, or reevaluate your budget.
27. Comparison Shop
Don’t be afraid to shop around! I know this is easier said than done, especially when you have kids in tow. If you’re unable to make multiple stops to get the best deals, don’t be afraid to price match!
28. Shop For Used When Possible
Shopping at thrift stores, or even swapping clothes with family members can be an excellent way to save money on clothing. But don’t limit yourself to clothing. Some of my best deals have been found on non-clothing items I’ve bought second-hand.
29. Delay Purchases
If it’s something that isn’t needed then and now, I like to delay purchases for at least 30 days. This helps me determine whether the purchase is truly a need or just a want.
30. Realize It’s Okay To Spend On Quality
I came to this realization when buying backpacks for the kids this summer. It’s hard to find quality backpacks without spending a fortune. In the past, I’d always let them pick what they wanted, without regard to quality, and liked when the price tag fit our budget. But then every year in January or February, that same backpack would inevitably wind up broken, completely unable to be fixed. I got used to buying a backpack on clearance after school started so I had one for just this situation. If I had just spent a little more on a higher quality item, I would have spent less on a backpack than I spent on 2! Bonus points when that backpack lasts more than a year!
31. Use Coupons On Necessities
Sometimes there is simply no other way you can slash expenses on some items. For me, it’s a name brand body wash. I have to use a specific body wash, or I break out into hives topped with a horrendous case of eczema. To avoid this, I stick to one brand of body wash, and I don’t stray. To help me save on this necessity, I buy it on sale and use coupons to help save even more.
32. Cut Out Expensive Habits
Whether you smoke, buy a daily coffee at a coffee shop, eat out every day, or purchase alcohol occasionally, these habits can get very expensive over time. If you have to keep it in the budget, scale back the spending, set a budget for it, and make it as part of your personal spending category rather than it’s own.
33. Plan Our Your Errands
If you can get all your errands done in one batch, not only does it save time, but you’ll also save money. It becomes very easy to spend small amounts here and there every time you’re out, and small expenses over time add up to much larger ones.
34. Pack Lunches
I know that for some, this isn’t the most popular thing to do, but packing your lunch every day can add up to big savings! If you’re spending $6 every day on a take out lunch during the work week, that’s $120 for a month. For us, that’s more than our monthly electric bill! The same goes for school lunches. If each of my three were to buy lunches each day, leaving out any extras that they pick up in the process, that’s $8 per day on school lunches.
Be sure to check out my must-haves when it comes to packing lunches!
35. Review & Cut Any Unnecessary Subscriptions
Are you still paying for a gym membership and you haven’t been to the gym in 3 months? What about a magazine subscription that you just don’t read anymore? Look through your expenses and cut out what you’re no longer using.
36. Revise Frugal Habits
What frugal habits are you already doing? If it’s meal planning, is there a way you can streamline your process? What about starting a garden to help cut back on some produce expenses during the summer and fall? Look at what you already do that’s frugal, and see how you can expand those habits, or add some new ones to your repertoire.
37. Read About Finances
Whether it’s investment strategies or motivation to help keep you on your path to get out of debt, there’s no better way to make sure you’re staying on top of your finances than by reading about finances. Some books I enjoyed were You Need A Budget* and The Total Money Makeover*.
38. Cut Redundant Expenses
Do you pay for landline and have cell service at your house? Do you pay for Netflix, but watch Hulu almost exclusively? Evaluate what expenses are redundant, and cut the ones that are no longer necessary.
39. Find Free Activities
There are tons of activities out there that are free, or super cheap! One of our family’s favorites is geocaching, but we also love hiking, gardening, and biking. If you’re at a loss on where to begin for free activities in your area, check out your local library. Ours always has an event calendar for the month, and there are some awesome activities offered at ours.
40. Find An Accountability Partner
Whether it’s your spouse, a sibling, or a friend, having an accountability partner can help immensely! It doesn’t have to be fancy, but just someone you can check in on from time to time to see how they’re making strides towards their goals, and vice versa.
41. Remember to Be Flexible
Things won’t always go as you’ve planned, so you’ll need to be able to go with the flow. If something comes up that affects your finances, don’t be afraid to adjust savings and financial goals to accommodate your new situation.
Are there any other financial habits you’re working on developing?
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