Strong money habits are really important to know. Actually, this would have been nice to know before the times of bad habits and ‘I’m young and don’t care and I can just go make more money’ phase of my life. (Where did all the money go…? I don’t know…Sigh….!).
Is your partner now giving you the side-eye, thinking you’re wasting a lot of money? (“What do you mean we don’t have money for milk or diapers??!!”) *facepalm*
Well, now you need to think long term by transforming your money spending habits to money saving habits. To start, you need to..
1. Change Your “Money Mind”
Strong money habits start from within our mind. This is easier said than done, especially if you’re very anxious about money right now, but train yourself to think like this:
“Any monies I don’t pay out now is money I gain at the end of the month.”
For example, if you think about getting that expensive drink at Starbucks for $5.00 and then decide against it, you’ve gained $5.00 to spend toward something more practical.
Another example is if you forego getting that shiny new cellphone for $1000.00, then that gains you more available funds to spend on your house payment or car payment at the end of the month. When you see that you are not struggling to pay for milk or your car payment, it’s a positive mental reinforcement that makes you smile inwardly at the practical wisdom you displayed. And this gets you mentally acclimated to your future financial goals
2. Review Your Personal Financial Status Often
There are money analysis applications available to download for Android or Apple phones to help you check your finances regularly and fairly easily.
We’ll be posting some suggestions for you in the future as we fully test out the usefulness of these. However, even if you’re not in the habit of checking your finances regularly, at least create a reminder for yourself to check your financial status once a week or once a month. Daily is preferable.
The more you analyze, the less of a chore it will become for you and it doesn’t take long either. Do it during your work break or when you have a free 10 minutes or so to concentrate. The more often you analyze, you’ll find opportunities you may have not seen before to add small, reasonable requests from the “wants” list to reward yourself or your family. Once it becomes a part of your strong money habits routine to regularly monitor your accounts, you will be in a better position to save more.
3. Get Real With Yourself and Your Situation
The first step in transforming bad money habits is to take a cold hard look at not only yourself, but to spend some time defining what you really need against what you really want. Designer brands are okay to like, but the problem is trying to acquire it all because you want to keep up with your family and friends… or the Kardashians.
You may think you can afford anything when you look at the money you make, but that doesn’t mean you can afford everything. Think about how often you impulse buy an item… That’s why you need to decide what your needs are and what you want.
You must start by creating a list of items that are vitally essential for your family’s existence. The car payment, the grocery bill and home utilities, for example, are really essential needs. In most cases, the cellphone bill is vitally essential as well, but do you really need those cell phones?
Perhaps a cheaper plan or phone may work just as well? After the essentials are defined, then build your “bucket list” for non-essential things like those designer shoes, that new Iphone or Android phone, and so on.
This doesn’t mean you splurge on all the items from your ‘bucket list’ at once. It is wise to just reward yourself by choosing one at a time and make it a rule to just stop there for now. You must primarily budget the funds for the items on the “Needs” list first, then reward yourself with a product from your “Wants” list once a savings target has been achieved.
4. Automate Your Savings
You should stop right now trusting in your own abilities to save money.
Why? Well, emergencies always seem to rise up and are the sworn enemy of strong money habits. But life happens not matter what, so don’t beat yourself up too bad about this, OK? You want to save for that trip to an exotic location next year? Develop an automated budget plan for your household so you can set it and forget it!
One way to do this is to have the money from your paycheck transferred automatically to different accounts. Be proactive and open a savings account that makes it hard to put your hands on the money right away. This makes it harder for you to withdraw your money on a whim and you’ll hopefully think twice about doing so for that item you just “have to have right now.”
Once payday comes, the money is saved immediately and you don’t even see it.
5. Automate Bill Payments
Automating your bill payment process not only saves you a lot of money on stamps and envelopes, but you usually see an immediate big boost in your finances.
There will also be less likelihood that your bills will be late and have to shell out additional late charges when you forget to pay a bill.
Late fees do have a tendency to add up quickly! So consider it a priority this year to setup automated paying of your bills automatically. Most banks have this as an included feature with most accounts. Honestly, if your bank does not offer this service, you might consider changing banks because they are behind the times!
6. Pack Your Lunch to Save Money
OK, the pic is a really good lunch from home!
Anyway, we all want to have a sense of camaraderie at work. And what better way to do that than going out to lunch to schmooze with the ‘movers and shakers’ of your workplace? A lunch bill of $9.95 + tax may not appear to make a dent in your budget at first and that lunch special may sound like a great bargain versus dinner prices for the same type of food.
The dilemma of course, comes when these lunch excursions add up to more days a week, maybe even twice a day if you’re working long hours. Eventually, your $9.95 lunches and brunches may add up to $200 plus or more a month!
Instead, think about making a sensible lunch the night before, or convincing your partner to do this for you. Even better, pick one day of the week to prepare lunches for work and see your savings rise exponentially.
7. Discontinue Credit Card Use
Let’s face it, very high personal and family debt is usually the main reason why most of us are unable to save.
You may feel like you earn a decent income, but you are not left with very few funds left after you satisfy your screaming creditors. Do they really care that you have to also pay your mortgage note, car payment and credit card debt? Um… no! Stats show that most households are drowning in credit card debt of about $15,000 or more. Below is an interesting graphic about how high credit card debt is in America today.
Here is a nationwide picture how much credit card debt we are carrying!
If this is the case for your household, then it is wise to seriously consider stopping your credit card use altogether to begin the process of chipping away at those high balances to get them paid off.
A debit card should be okay, but of course you need to watch your spending. You don’t have infinite money in your bank account after all!
You may be thinking though ‘What about all the points I’ve earned from using the credit card?’ Well, once you’ve earned the points, most of the time, they don’t get taken away right? It may be wise to forget about those points right now in order to dig yourself out of a hole. Abandon your credit card use for 6-12 months and put the card out of sight somewhere at home so you’re not tempted to use it.
8. Practice Using Money-Saving Coupons
Have you ever inwardly been embarrassed for someone using coupons at a grocery register? Did all those rolling of the eyes help much? You have to get over this and recognize that this is not weakness, but another great strong money habits strategy. There are great savings to be had from using coupons. Coupon use should not be viewed as a poor man’s practice anymore.
Try to get into the habit of using coupons to save as much money as you can. Especially check your local grocery stores for great deals. There are hundreds of companies who want to knock off some money from their product to induce you to try it. Check your local newspaper, especially the Sunday edition for many weekly coupons.
The savings may not appear to be much at first, but just think about this: What if you only saved $5.00 for the week? Well that adds up to $20.00 monthly and $260.00 a year. That’s $260.00 you did not have before. As you get better with couponing, the savings will add up to much more!
9. Learn How to Set S.M.A.R.T Goals
If you haven’t figured it out by now, you should realize that strong money habits without planning and purpose WILL NOT not work very well.
Just having the dream and desire to spend your retirement days languishing in Tahiti is not enough though. Along with your dream, S.M.A.R.T. goals need to be set. This is an acronym that stands for…
- Specific: targets a specific improvement area
- Measurable: quantifies the progress with data
- Assignable: specifies who will carry out the goal
- Realistic: takes into account the available resources to state what can be achieved realistically.
- Time-Related: targets a time when the goals can be achieved
This type of goal monitors all progress with the above parameters all along the way to the goal. So, instead of just stating, “I want to retire early,” a S.M.A.R.T. (er) statement is “I want save $250,000 over the next 7 years.” Then you can methodically keep data on how you spend money all the way from your current financial standing to compare with future numbers so you can refer back and see how much you’ve progressed!
10. Use Tools to Track Your Expenses
You will always unwisely spend your money if it’s not managed well. Sure, your strong money habit goals is to keep the costs as low as possible while you have a decent income coming in. But life gets in the way and the dilemma is that you may not always have the time to check your finances on a regular basis.
This in turn may cause overpayment of services or utilities. Some companies will let you know and refund you if you pay too much, but let’s face it, we live in a dishonest world.
In times past, when I was trying to figure out how debits and credits were getting away from me, I used to just list out the items on a scratch sheet paper, but then I kept losing the paper! Sometimes I would unwisely write the items on the back of an envelope. Um… do not try this because you will lose it!
I then tried using a spreadsheet program to keep track of everything. It was awkward and cumbersome at first but at least it showed me at a glance where my hard earned money was going.
Simple budgeting is indeed important because without it you have absolutely no clue where your funds are going.
There is a better way though. There are many applications for your smartphone that can be downloaded and used for a more automated way to track expenses and keep up with your financial historical data, past and present. We will be testing some of these apps and giving you our honest recommendations on these for our mailing list subscribers only, so stay tuned!
11. Start a Side Hustle
Once you have saved money from your current budget and as time allows, try to start a side business or company to raise your overall financial situation. One idea some have started with is to take online surveys that pay you cash to complete or short term gigs are a good place to start. We will be looking at these opportunities in upcoming articles along with others that can surely add to your bottom line!
In conclusion, the quicker you can institute the above strong money habits strategies, you can indeed turn back from ingrained bad financial habit practices so that you can start improving your life and your credit score. Good habits take time, but that is time well spent! Your family will appreciate you for it.