Whether you take your resolutions seriously or just want to adopt healthier financial habits, this one is for you. Just as a balanced diet and regular exercise contribute to your overall health, cultivating financial wellbeing requires adding some good financial habits to your routine.
Sustaining financial success involves more than just a well-crafted plan; it requires the mindful cultivation of habits that form the foundation of your financial fitness. In this blog post, we’ll explore six essential habits to help you maintain and enhance your financial wellbeing throughout the year. And we’re even dropping in a few tips to help you stick with it.
Before we dive in, it’s important to reiterate that these financial habits are supplements to a solid financial plan. So, we are skipping over some of the financial basics, including creating a budget, contributing the maximum to your 401K, and having an emergency fund.
Here Are Six Good Financial Habits to Adopt This Year:
1. Check Your Accounts Regularly
The first habit on our list is a simple yet effective one—regularly check your financial accounts. This ensures that you stay on top of your financial transactions, monitor for any irregularities, and maintain a clear understanding of your overall financial health. It can also help you identify fraud and avoid overdrafting accounts.
2. Implement a “Wait List” for Spending Decisions
No one wants to be on the wait list, especially if it’s for Pilates class or your favorite restaurant. But when it comes to your finances, a wait list can be a good thing. To prevent impulse purchases that might derail your financial plan, adopt the 24-hour rule.
When faced with a significant (or impulse) buying decision, wait one day before making the purchase. This gives you time to reflect on whether the expense aligns with your financial goals and priorities. Often the impulse subsides, and you’re left with more money in your account instead of buyer’s remorse.
Pro Tip: Make Financial Management Enjoyable
When I say, “Let’s review your budget and monthly expenses,” do you want to run for the hills? It’s hard to get something you don’t enjoy to the top of the list. So, let’s change that!
Turn financial tasks, such as reviewing your monthly spending, into enjoyable experiences by incorporating activities you love. Put on your favorite music , put on some cozy slippers, or grab a friend and head to your favorite coffee shop. You can also reward yourself with a glass of wine or indulge in a beloved TV show after completing your financial review. By associating positive experiences with financial management, you’ll be more likely to stay committed to your habits.
3. Track and Analyze Spending Regularly
Just as fitness enthusiasts track their workouts, keep a close eye on your spending. Regularly analyze your expenditures to identify patterns and areas where adjustments can be made. This habit can help you identify expenses that you can cut, such as unused subscriptions, and empowers you to make informed decisions next month.
Pick a recurring schedule that works for you. Maybe it’s every paycheck, the last Thursday of every month or the first day of the month. Add a recurring appointment to your calendar to help you maintain this important financial habit.
4. Automate Your Savings and Investments
Take advantage of technology to simplify your savings and investments. Set up automatic transfers to your savings or investment accounts each paycheck. By paying yourself first, you can ensure that your financial goals are prioritized, helping you build wealth consistently over time.
If automatic transfers aren’t possible between certain accounts, then make sure you add this to your to-do list every time you check your accounts or are paid.
Pro-Tip: Financial Habits Are Self-Care
Think of financial management as an act of self-care. Spending time on your finances is an investment in your wellbeing. Treat it with the same level of importance as other self-care routines.
5. Beware of Lifestyle Creep
As your financial situation improves, be cautious of lifestyle creep—gradually increasing your spending as your income rises. Some lifestyle creep is typically fine as long as you’re still saving more than you’re spending. And you worked hard for it! Enjoy it… a little. Be sure to revisit your budget regularly to ensure it aligns with your current financial goals and values.
Nicer things make us feel great in the moment but eventually they can become the new normal and pave the way for even more lifestyle creep. Being aware of lifestyle creep and making it a financial habit to revisit can help you maintain control over your finances.
6. Stay Informed and Educated
The financial landscape is ever-changing. Stay informed about economic trends, investment options, and changes in tax laws. Continuous education empowers you to make informed decisions, helping to ensure that your financial plan is adaptive and resilient.
Your financial advisor might take on much of this work by recommending rebalances to your portfolio and by keeping you informed of changes in the tax laws, deadlines, and updates to retirement contribution limits.
Conclusion
As you continue your journey of financial wellbeing, remember that cultivating healthy habits is an ongoing process. By incorporating these practices into your routine, you’ll not only safeguard your current financial standing but also pave the way for a more prosperous and confident future. With a solid foundation, a well-crafted plan, and the right advice, you’ll be well on your way to achieving lasting financial peace of mind.