Your financial habits play a huge role in your current financial situation and your future financial stability. There are plenty of people who are making six figures a year and they’re drowning in debt, living payday to payday.
On the flipside, I know people who are making less than half that but, due to good financial habits, are financially stable and have a bright financial future ahead of them.
Over the past few years, I have adopted many good financial habits that have put me on the path to financial freedom. I’m getting close to being debt-free, investing for my future, and saving for my retirement.
I’ve never received an inheritance, annuity, monetary gifts from relatives, etc. And I don’t earn a massive salary. I’m in that position due to dropping bad financial habits and adopting good ones.
Here are 10 financial habits that I recommend you start implementing. Trust me, they will change your life!
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Stick to a budget
Budgeting is the first and foremost step to help you keep your finances in check. Always have a specific amount set aside for the expenses that you need to incur during the month and try to stick to those expenses.
At the end of the month, revisit all your actual expenses and compare it to the budget. This will help you recognise the areas where you might be spending more than you need to and you can then take necessary measures to prevent the same from happening in future.
It’s important to review your budget every now and then to make way for the changes in your financial habits.
Would you like to know how to create a budget, but don’t know where to start? Then see the post below:
Set financial goals
One of the most important financial habits is simply to set financial goals and spend a little bit of time reviewing them every day.
Write them down and be as specific as possible. For example, if one of your financial goals is to buy a house, what are some of the things you want in a house?
How much does that house cost? Where is it located? Be as specific as you can with each of your financial goals and review them every day.
Would you like to know how to set SMART financial goals, but don’t know where to start? Then see the post below:
Pay yourself first
You’ve probably heard this before, but if you’re like me, you might not really know what it means. Basically, this just means that instead of spending your money and saving what’s left, you decide to save money upfront and spend what is left.
How many times do you actually save any money if you save what’s left after spending? Whether you’re saving your emergency fund, for a large purchase, or investing in your retirement account, make sure you’re including it in your budget and moving that money first!
Don’t spend more than you earn
This might sound like a “duh” habit, but the facts are that a LOT of us spend more than what we earn. Putting purchases on a credit card and then saying “I’ll pay it off when I get the money” is a perfect example of this.
Part of the problem is that as a society, we’ve developed a need it now mentality. Instead of saving up for something we want and then paying cash for it, we want instant gratification, so we just swipe our credit card instead.
Avoid doing this and you’re already ten steps ahead.
Would like to learn more about how implementing a money mindset can help you achieve financial freedom and live a happier life? Then the post below:
Use every method to save
We live in a world where we can’t avoid spending some money, we need to buy things like food and clothes just to survive. That’s why you need to learn some awesome ways that you can save money when buying things, especially online.
This is a free service that gives you cash back on stores like Amazon and thousands more that you already shop from. You’ll get a quarterly payment based on money you spent that you can use toward savings or investing.
There are even crazier ways you can try to save money that we can learn from our grandparents and other generations, see the below posts relevant to Frugal Living for those.
Would you like to know more about how you can save money? but don’t know where to start? Then see the posts below:
- 10 Things to Stop Buying to Save Money – Simple Guide to Save Thousands!
- 9 Tips to Save Money – Simple Guide!
- Frugal Living Lifestyle – 11 Habits of Frugal People
- How to Save Money on Online Shopping – 8 Tried and Tested Tips!
- 10 Tips To Save Money On Groceries – Tried And Tested Guide!
- Is The Honey Extension Legit? – Save Money Online While Shopping!
Have multiple income streams
In a study, it was found that 65% of self-made millionaires had 3 or more income streams. Now, this doesn’t mean you have to aim to be a millionaire or that all people who are debt free are millionaires. It means that of those who have a significant amount of money (and one would hope are those who manage their money well), almost two-thirds of them have multiple income streams.
So, what does this mean? Save money, budget
An income stream is a way for you to earn money. For example, when you work your job you get paid a salary and therefore that is one income stream. If you have two jobs, you have two income streams.
Generally speaking, one income stream doesn’t rely on another and therefore if one income stream is taken out of the mix, then you have other sources of income to keep you going.
Things like investment properties, shares or second jobs are all common income streams.
So, what does this mean for you?
If you want to pay your debt down fast and live a debt-free lifestyle, find different income streams you can add to your overall wealth.
Interested in earning some extra cash through a side hustle? Then see the posts below:
Don’t impulse shop
Impulse shopping on a regular basis isn’t the best money habit you can have. Not only does it potentially lose you a lot of money, but it also makes you buy a lot of stuff which you probably don’t even need.
I’m not saying that going shopping once in a while is going to completely mess up your finances. However, there is a smart way to shop that is going to be more effective than impulse shopping.
A simple way to shop with a purpose is to have a shopping goal. Before you go out, make a list of the things you need to buy, and stick to that list.
If you feel like you really want something that isn’t on your list, tell yourself that if you still want it the next day, you will come back for it. Chances are, you will not really feel like going back to get it. That will tell you that you didn’t really want that item in the first place.
Create an emergency fund
I read somewhere that most in the people in UK don’t even have £300 tucked away for emergencies.
And I’m not going to lie. For a long time, I didn’t have it either. It wasn’t until I actually had an emergency that I realised how important having an emergency fund is.
If you are in the same boat I was in, it is never too late to start. Make saving for an emergency fund a priority, and put as much in it as you can. £300 is a good start and eventually, move up to £1000.
If things ever go wrong, you will be glad you planned for a rainy day.
Would you like to know how to create a emergency fund, but don’t know where to start? Then see the post below:
Automate your finances
You should never have to worry about paying your bills on time because people who manage their money well automate their finances so they don’t even have to think about it.
Create a bills account, ensure there’s enough money in there and have your bills deducted from this account. This means you aren’t mixing your spending money with your bills money and you have money waiting for upcoming expenses.
Save up for big purchases
Whether you want to buy a TV, remodel your kitchen, or even put a down payment on a house, it will always be less stressful to save up the cash.
Financing for so many things is surprisingly easy, especially from retail stores. However, not only will you not have that purchase following you for months, but you can often get a better deal if you can pay cash upfront.
This is especially true for things like cars and furniture. And honestly, if you can’t save up and pay cash for something, then you really can’t afford it!
10 financial habits of the wealthy – Final thought
Personal finance doesn’t have to be scary; it can be simple if you just take it one step at a time.
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.
I hope this list of tips helps you to achieve a better status financially.
If you can think of any other financial habits that can kick-start your journey towards wealth, let me know in the comments below.
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Hello! My name is Adam and welcome to my space on the internet. Here you can find me writing about topics such as lifestyle, self-care, self-development, finance, saving money and making money. Come and join the community!