Wouldn’t it be great if we could all have a crystal ball to see what our financial future holds? I know, right! Unfortunately, that’s not possible. What is possible is adopting good money habits that will put us in a better position to get that bag in the future. On that note, here are ten money habits you can implement today to improve your financial future:
1. Create a Budget and Stick to It
One of the most important ingredients to achieving financial stability and peace of mind is having a budget. A budget is a plan for your income and expenses that helps you manage your money effectively. It allows you to track where your money is going and make informed decisions to ensure you don’t overspend or run out of money. It can also help you save for long-term goals like retirement, a down payment on a house, or a vacation. Consider this the foundation for your financial future. Everything else kind of falls apart without getting this one down.
2. Avoid Impulse Purchases
Impulse purchases are those purchases that we make without much thought or planning. They can be as small as a chocolate bar at the checkout counter or as large as a new car. It may not seem like that big a deal at the time but it can snowball on you, often leading to buyer’s remorse, especially when you don’t have the money to cover the cost of the item. If you find yourself falling into this trap, try to avoid shopping when you’re feeling emotional or stressed (or hungry). Also, make a list of what you need before you go shopping and avoid buying anything that’s not on the list.
3. Save for Emergencies
Another key habit for improving your financial future is an emergency fund (because you haven’t heard that from us before). Emergencies can happen at any time and can put a significant strain on your finances. To avoid financial stress in the future, make it a habit to save for emergencies. Experts recommend having at least three to six months’ worth of living expenses in an emergency fund. This way, if you lose your job or have unexpected expenses, you can tap into that instead of relying on credit cards or loans.
4. Pay Yourself First
Paying yourself first means setting aside a portion of your income for savings before paying your bills and other expenses. By making savings a priority, you’re more likely to achieve your long-term financial goals. You can start small by setting aside 10% of your income each month and gradually increase it over time. As you become more accustomed to the practice, you can align yourself more with the 50/30/20 rule of budgeting.
5. Manage Your Debt
Debt can significantly drain your financial resources and put a dent in your long-term financial goals. Make it a habit to manage your debt effectively. Start by paying off any high-interest debt like credit card debt as soon as possible. Then, focus on making the minimum payments on other debt like student and car loans while working to pay them off faster. Remember that you have options for tackling that debt including the debt snowball and debt avalanche!
6. Invest for the future
A big part of developing habits to improve your financial future is looking toward the future. Investing in stocks, bonds, mutual funds, or real estate is a great way to grow your wealth over the long run. Make it a habit to invest regularly for the future. If you’re not sure where to start, talk to a financial advisor, or consider using a robo-advisor that manages your investments for you based on your goals and risk tolerance.
7. Compare Prices
Comparing prices can save you a lot of money over time. Before making a purchase, do some research to see if you can find the same product or service at a lower price. Use apps and websites like Honey, Rakuten, and CamelCamelCamel to compare prices and get the best deal. Also, check with your credit card company to see if they offer a similar service. For instance, Capital One offers discounts/coupons when purchasing from select companies.
8. Use Credit Wisely
Speaking of Capital One, credit cards can be a great tool when used wisely. They can help you build credit, earn rewards, and provide you with fraud protection. However, if used carelessly, they can lead to high-interest debt and damage your credit score. Make it a habit to use credit cards wisely. Pay your balances IN FULL each month to avoid interest charges and late fees.
9. Set Realistic Goals
This is easily one of the most underrated habits for improving your financial future. Setting realistic financial goals will keep you grounded and temper your expectations. Make a habit of setting specific, measurable, and achievable goals for your finances. Write them down, and create a plan to achieve them. Review and adjust your goals regularly based on your progress and changing circumstances. Remember, flexibility is key.
10. Learn from Your Mistakes
Nobody is perfect, and everyone makes mistakes. When it comes to money, it’s essential to learn from your mistakes. If you overspend, miss payments, or make poor investment decisions, don’t beat yourself up about it. Instead, learn from your mistakes and make changes to avoid making the same mistakes in the future. It’s a journey and even though you may stumble, we never want to see you fall.
In Conclusion: Using Habits to Improve Your Financial Future
Improving your financial future takes time, effort, and commitment. However, by adopting the ten money habits discussed in this article and making them a part of your daily routine, you can take control of your financial future and achieve your long-term financial goals. Remember, when it comes to finance, consistency is essential. Use these habits as a foundation to manage your money effectively and build a financially secure future. You know you deserve it, we know you deserve it, so all that’s left to do is get out there and get it!