10 Financial Habits Everyone Should Have
A habit is a regular tendency or practice we usually do without thinking. Some habits can be good, while other habits not so much. Think about how hard it is to break a BAD habit you developed overtime. It’s really difficult, but not impossible if you are intentional about it. This not only applies to our everyday lives, but also to our financial health as well. To excel in our finances we have to break up with the bad and give the new ones a chance. The new ones will develop over once you begin to take control of your money and make it work for you instead of the other way around.
Curious to see if you have healthy financial habits? Here’s a list 10 financial habits everyone should have:
1. Tracking your income and spending:
Having a budget is crucial to ensuring that your money is being allocated accordingly. If you have financial goals such as traveling, purchasing a new house, or even paying off debt, a budget will help you do that. If you’re not sure where to start there are a few apps that can help you see where you’re spending you money. Some of my favorites are Mint.com, Clarity Money and You Need A Budget.
2. Spending less than you earn a month:
Living above our means is basically spending more money than we have. I’ve been in this situation before and promised myself I wouldn’t do it again because I was always playing catch up. It doesn’t leave any room for mistakes instead it’s a continuous debt cycle. When you spend less than you earn a month you have wiggle room to save for travel, build your emergency fund, and put money in an investment account.
3. Putting money away for a rainy day:
This is also known as your emergency fund. This should be at least 3-6 months worth of your essential expenses. By essential I mean things that you need to keep up your current lifestyle. You can easily figure this out by multiplying how much it costs to keep your household running by 3 or 6. Note this does not have to be done all at once, but you should be feeding your emergency account every chance you get.
4. Taking advantage of pretax:
Pretax means exactly just what it says- which is before taxes. By utilizing this benefit your gross income will be automatically less. Less income means less taxes. Some things you can get pretax are your transportation, health insurance, 401k etc. Check with your employer to see other benefits you can enroll in that are pre-tax.
5. Being transparent with your debt:
Sometimes looking at our debt is cringe worthy. Although it can be painful it’s one of those necessary evils. If you want to tackle it head on and create a plan reviewing your debt should be a priority. Not sure where to start? 1. Pull out a blank sheet of paper 2. Create a list of all your debt including car loans, student loans, credit card debt etc. 3. Write down the name of the account, balance, and minimum payment due each month. 4. Choose one to start paying down, create a plan, and get to work.
6. Reviewing all of your statements:
I can’t tell you how much money I’ve saved by going through my statements and finding discrepancies. Nowadays it’s easy not to review our statements because it comes into our email inboxes. But if what if I told you could save money if you took some time to review them? Take an extra step and give companies a call to see if they have any specials running, Doesn’t hurt to try.
7. Paying your bills on time:
Always great practice to pay your bills on time as much as you can. This can actually save you money because you won’t be slammed with late fees that add up over time. By also paying your bills on time you avoid having your accounts going into collections, which can affect your credit.
8. Separating your savings account:
Your savings accounts should always be separate from your main checking account. This is a preventative measure to ensure you won’t be deterred from your savings goals. It’s effective and works even better when everything is automated. Bola actually recommended using Rize and I absolutely love it. It has amazing features which allows you to create different savings goals within that one account. Check it out!
9. Increasing your 401k deduction when you get a raise:
I don’t know about you, but every time I get a raise I think more money for me. After that quick thought I get grounded and realize that it actually means more taxation on me. Instead of seeing it as realized income I automatically increase my 401k contribution. This is another way to increase your savings without really putting a dent in your pocket. Remember more money doesn’t mean you should spend more.
10. Automating your savings:
Statistics show people are more likely to save money if they automate it and forget it. Out of sight out of mind right? Automation is a great way to make sure you are saving for your goals. It also holds you accountable because you are less likely to spend it on something else.
Felicia Blaise is a Travel Finance Strategist who teaches millennial women how to manage their money so they can travel the world.
What she’s most passionate about: Financial literacy and immersive cultural experiences.
Her Clever Girl Super Power: Travel hacking.
Keep up with her: If you’re ready to start catchin’ flights not fees, keep up with her at feliciablaise.com for tips and resources.