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First off, I want to give a big welcome to Natalie from Finance Girl!
When Natalie approached me about guest posting on Creative Savings, I absolutely fell in love with her thoughts on successful money habits. I'm a big proponent of small changes leading to longterm results, and am so excited to share her insights with you today.
Trust me, you will want to begin practicing these 6 simple habits right away!
Simple daily disciplines – little productive actions, repeated consistently over time – add up to the difference between failure and success.
– Jeff Olson, The Slight Edge
On my self-improvement journey, I’ve learned one really important thing – the power of habits. Whether it relates to health, relationships, or finances, the power of habits is unprecedented. This is great news for you! Instead of attempting something grand, you can instead focus on small, daily actions that will have dramatic results over time.
You don’t just want to have any old habit, however. You need to make sure that your habits are positive, and that they move you toward success. You don’t want to be in the habit of doing something if it’s not taking you toward a vision or goal. But once you decide which habits to adopt, you can implement them, and little by little, you’ll change your life over time.
In terms of finance, there are numerous ways to go about building a strong financial foundation. Here, I’m talking about the best habits I think you can be in to set yourself up for financial success.
6 Money Habits to Set You Up for Success
1. Pay yourself first
Set up your finances so that as soon as you’re paid, money is automatically moved into a savings account. One option is to have an amount from your paycheck directly deposited into a separate bank account. Another option is to set up an automatic transfer on payday from your checking account to a savings account.
Here’s why paying yourself first is important: If you pay yourself first, you’ll still be broke by your next paycheck, but this way you’ll have savings. What do I mean by this? That you tend to spend what you let yourself spend. If you are in the habit of paying yourself every pay period, you’ll treat it as an expense and build wealth little by little over time.
2. Avoid debt
If you have debt, create a plan to get out of it. Once you have your get-out-of-debt plan, implement it in the form of a habit. Don’t wait until the end of the year for a bonus. Instead, start chipping away at your debt regularly (daily, weekly, or every pay period). If you constantly are chipping away at your debt, you’ll begin to see your debt go down, which is exciting. This excitement will give you momentum to keep going and get out of debt fast. Once you’re out of debt, continue in the habit of staying out of debt.
3. Check in on your finances regularly (I do it weekly)
Set up a time where you review your finances regularly. This can be every day or weekly. Put it on your calendar as a reoccurring event. This way, you’ll know that’s the time where you review your budget, income, spending, etc. It’s the time where you make sure you’re being intentional with your money and in control of your financial foundation.
4. Use cash / debit (avoid carrying a credit card balance – ever)
Instead of using your credit card, get in the habit of using cash or your debit card. Being in the habit of using only the money that you have will change your mindset to one that only pays for things when you have the money in the bank. You won’t even have the option of using money that you don’t have if you pay with cash or a debit card. Being in the habit of only buying things when you have the money will put you on track for financial success.
I am 28 years old and I’ve never had a credit card – ever. It’s never really crossed my mind. That in and of itself is proof that it’s possible to have a different mindset than the mainstream.
If you do choose to use credit cards, make sure you’re in the habit of paying off your bill every single month. It’s never good to carry a credit card balance. (Carrying a balance regularly would be an example of a bad financial habit.)
Note from Kalyn: Natalie and I might disagree on exclusively using cash or debit cards, but I totally respect her view, which is why I wanted to share her post on Creative Savings! You can read about my thoughts on credit cards HERE.
5. Say “no” to yourself at least once a day (to remove any sense of entitlement you have)
Get in the habit of saying “no” to yourself once every day. By saying “no” to yourself, you’ll remove any sense of entitlement (which usually shows up as a justification for buying something because you “deserve” it). If you’re in the habit of saying “no” to yourself, you will be less tempted to overspend and buy things you can’t afford.
6. Read something financial once a week
No one will ever care more about your finances than you do. So, it’s your responsibility to know what’s going on, even if you do hire a financial professional. If you simply devote one hour of reading the financial news or a finance book every week, you’ll start learning more and more. Over time, you’ll be amazed at how much you know. Of course, you can read more than once a week, but starting here may be just enough to get you going. There is power in knowing and that’s exactly what this habit is about. Knowing how to manage your own money.
A Final Note!
If you can do these 6 habits, you can change your life. Remember, it’s the little things you do daily over time that make the difference between failure and success. Instead of letting your finances overwhelm you, try implementing these 6 habits first. You’ll be amazed at the success that comes from doing small things on a daily basis.
In his New York Times best selling book, Secrets of the Millionaire Mind, T. Harv Eker says it best when he says “Wealthy people are not any smarter than poor people; they just have different and more supportive money habits.”
Have these 6 habits down pat? Check out this amazing resource page that has more than 60 tips and ideas about how to manage money better.
What Money Habits Do You Still Need to Work on?
Natalie Bacon is the author of Financegirl, where she blogs about finance and intentional living for young, professional women. She’s an attorney by day and a personal finance freelance writer and blogger by night. You can join her as she digs her way out of student loan debt on Facebook, Pinterest, Twitter, Google+, and Instagram.
Disclosure: Some of the links in the post above are affiliate links. This means if you click on the link and purchase the item, I will receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. Read my full disclosure policy here.