Every step we make can significantly affect our financial status. Hence, we must have excellent decision-making skills and good money habits to secure our finances. Speaking of habits, many people believe that they are hard to learn once you’ve been accustomed to doing things differently. While that is true to some extent, it is not always the case – especially when it comes to finances. In fact, tons of good money habits can easily be practiced to have better money management skills.
And if you want to know some of them, then this is the perfect article for you. Written below are 12 good money habits for life that can help you have better finances. If you’re ready, then let’s get started!
1. Lower Your Credit Card Debt
- Debt is not entirely bad, as it can still help you buy the things that you need. However, certain types of it that most of the time can do more damage than good – and one of them is credit card debt.
Yes, credit cards can also help you purchase things that you need. However, with their compounding interests and possible hidden charges, the amount of money that you will have to pay for your credit card fees will be much higher than what you’ve used it for should you not pay it off in full.
Lowering your credit card debt is a good money habit to develop. It will not just help you manage the interest fees you’re going to pay, but it will also increase your savings and lessen the number of stressors you have to deal with on a daily basis.
2. Pay Your Bills on Time, Every Time
- There are a couple of reasons why paying your bills on or before the due date is an excellent money habit to form. First, it makes your payment history look good, which contributes to your overall credit score. Second, it will help you avoid all of those late-payment penalties. And third, you will not have to pay those interest fees that they charge on top of the late payments.
Some fantastic ways to practice this habit are paying your bills every two weeks or monthly, using an auto-payment software, marketing your calendars with the payment dates, and setting deadline reminders on your phone.
The key is to ensure that you are practicing good money habits by paying each and every bill before or on the due date.
3. Be Wise With Store Sales
- Buying something that isn’t necessarily a need even though it comes with a discounted price is not okay. Why? It’s because you’re not really saving your money, you still spent it on something that you are not going to use anytime soon.
Yes, it’s hard to ignore products with significantly discounted prices, but still, if you want to improve your finances, you need to be wise with your choices. Ask yourself whether you are purchasing the product because you need it or because it’s on sale. If you answered yes on the latter, then better rethink your decision.
If possible, perhaps you can put that purchase off by practicing Just-In-Time Purchasing or possibly forego the purchase altogether.
4. Set A Budget (And Stick to It)
- No money-saving related article will be complete without budgeting. Living on a budget does not sound exciting but it is oh so necessary to achieve Financial Freedom. If you want to build a solid foundation for your finances, then setting a budget and sticking to it is a must. Having a budget to stick to will allow you to have a closer look at how you actually earn and spend your money.
Since you have to list down all of the things you need to buy and pay for a specific period (could be week or month depending on how long you want your budget to last), you will get the chance to see all the places where your hard-earned money goes to therefore allowing you to have smarter spending choices.
If you’re new to budgeting, be sure to check out the MoneyByRamey 8 Step Process to Setting Up Your Own Budget.
5. Monitor Your Expenses
- Another good money habit to learn is tracking your expenses. This sounds easy to do at first, but it is actually not. Why? It’s because, for you to properly follow all of your expenses, you need to be honest about every single thing you spend your money on. Whether it’s something expensive, such as a piece of furniture, or a comparatively cheap such as a bottle of water, everything should be accounted for so you can have a clear idea where your money is going.
- What you can do to help with this is to list all of your expenses at set increment of time, such as weekly or at the end of each day. Make sure you write what you purchased and the cost of the item or service. When you’re done, take a look at your list and read each entry then start thinking whether this is an expense that you needed to incur.
Make sure to do this exercise on a routine basis until it becomes an actual part of your routine. That way, monitoring your daily expenses will just be as normal as brushing your teeth.
6. Try Cost-Effective Alternatives
- Suppose you decided to stick on a budget or monitor your expenses. In that case, chances are, you already know which products do you spend your money on the most, right? So, if you’re keen on saving money, why not look for cheaper alternatives to those products?
Whether it be clothes, shoes, or even food, finding substitutes that are more budget-friendly and possessing good quality can help improve your finances without sacrificing your favorites. Alternatively, you can stop buying things that you don’t always need to have, so you can still purchase items that you really love and cannot live without.
7. Know Your Numbers
- Establishing good money habits will help you handle your finances better. But the question is, how would you be able to manage your money properly if you don’t even know its exact amount? It’s essential to know just how much money you’re working with to properly plan the things you can and cannot do.
Not interested in checking your bank accounts one by one? Then download apps like Mint. It’s a secure application where you can connect all of your bank accounts and access them anytime you want to just by logging on to their site. By checking your finances daily, you will be able to track your spending pattern and make sure that each charged amount does not come with hidden fees.
8. Use Coupons and In-Store Promos
- The next entry on this list of good money habits is using coupons whenever you shop. Sure, coupons can make you seem uncool and a cheapskate, but so what? They can actually help you save some extra cash, especially if you’re going to buy food and household items.
Suppose you’re familiar with the “Extreme Couponing” show. In that case, you probably already know how much money you can get from using coupons when shopping in local grocery stores. But if not, then maybe it’s time to watch an episode or two. It will open your eyes to so many essential things.
Start practicing this habit by cutting out the coupons you see in newspapers, magazines, and product packages. In addition to that, you can also search for them online by going to store and promo directory websites.
9. Start a Weekly Meal Prep Routine
- Yes, this is also one of the good money-saving habits that you can learn. Planning your meals for the day or week ahead is vital. It can prevent you from turning to fast food and other easily accessible unhealthy meals.
While it’s normal for us to gravitate towards certain types of food that are widely available such as burgers and fries, chances are, they lack the nutrients you need to get through the day, and they also might not even keep you full for a long time. So most often than not, you will buy more right before your day ends.
Stop yourself from doing that by planning your meals. You can do this the day before or on every Sunday right before your workweek starts. Think of how many times do you want to prepare and eat your food at home and when you want to visit restaurants and food stalls. Try to think of ways to save food as well by looking for ingredients that involve using leftovers and doing take-outs,
Planning your meals is a serious habit that you must practice as often as you can. To help you get started with it, check out Emeals. This is a fantastic site that can help you plan out your meals, come up with grocery lists that got everything you need, and so much more.
10. Wait for 30 Days Before Buying Something
- This does not apply to everything obviously but more on the things that aren’t really a ‘need’ but more of a ‘want’ Like for example, you’re browsing on an online clothing store, and you found the most fantastic pair of jeans. You really want it even though you still have a couple of good ones that you can use. Instead of clicking the ‘add to cart’ button, why not include it in your ‘favorites’ instead?
By doing that, you won’t be tempted to complete the purchase as it is precisely not in your cart. But if that is still too tempting to you, then just bookmark the page on your browser and set a reminder on your phone for 30 days later so you can look back at it and decide if it is still something you want to purchase. If the feeling stays the same, then do it, but if not, then just move on.
This can become a full-on habit if you apply it whenever you need to buy something online or offline. As long as it is just something that you want, of course, and not an actual need.
11. Open a High-Yield Savings Account
- If you’re really all about improving your finances, then you better set up a secured place where you can store all of the money you saved – and what better way to do that than by open a savings account.
You can put all of the money you saved from avoiding late-payment fees, purchasing groceries on sale, choosing cheaper alternatives to your expensive necessities, and so much more into your savings account. That way, you won’t accidentally spend them.
Another great reason to have a savings account is that they can grow over time thanks to their interest. According to FDIC, the interest rate varies per bank, but the average stands at 0.06% APY.
12. Start Investing for Your Retirement
- What? Already? Yep, investing for your retirement as early as now is one of the most vital money management habits you can ever learn. And why is that? It’s because if you wait until you’re older, then you might not have enough to catch up. Your status financial-wise might have changed already as well, leaving your future uncertain.
It’s better to start while you’re young and still fit to work so you can continue investing in your future. And so, when the time comes that you have to retire, you will no longer have to worry where you stand financially.
You can start investing for your retirement by educating yourself first on how you can do it properly. Investopedia, SensibleMoney, and other similar sites are great web places to turn to if you want to learn more about it.
These 12 are just some of the good money habits that can help you have better finances. There are plenty more out there, of course, all you have to do is discover them by reading more finance-related articles like this one. Continue educating yourself on this matter, and you will surely improve your money management skills.