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Last Updated on 2015-06-15 by Kassandra
Top 10 Highly Effective Personal Finance Habits
A big income and fancy degree do not guarantee financial abundance. Effective money habits are an important part of achieving financial independence. Over time, your habits will ultimately determine your outcomes. Choose your habits wisely and watch your bank account grow. A few new, simple habits can create positive change.
Add these money habits to your financial life:
1. Automatically transfer money to your savings or brokerage account.
If left to our own devices, few of us would consistently put money into our savings account each month. Remove the temptation and responsibility.
Save a portion of each paycheck without having to think about it.
2. Review your financial goals each day.
One of the most effective ways to save and invest effectively is to review your financial goals and keep them fresh in your mind.
Don’t have any goals? Make a few.
3. Only use a credit card in an emergency.
Sure, there are cards that allow you to earn points toward good and services. But is the risk of running up your debt worth it?
Pull out the debit card and save the credit card for emergencies
4. Pay your bills weekly.
Set up a day and time each week to pay your bills. Try to pay all bills at least 10 days before they’re due.
Holidays and weekends can prolong the amount of time it takes for online payments to post or for the mail to reach its final destination.
Avoid waiting until the last minute, and late fees will be a thing of the past.
5. Learn a little more each week.
You might have had a single class on personal finance in high school. Any additional education on the topic will be your responsibility.
Spend 30 minutes each week on a topic that will enhance your understanding of personal finance.
Here are a few ideas:
- Managing debt
- Investing
- Retirement planning
- Taxes
- Diversification
6. Check your bank accounts each day.
Take a minute and review your account balances.
Everyone has unexpectedly run out of money at one time or another. Never be surprised again.
7. Live below your means.
This single habit makes it easier to pay bills, save money, and avoid debt.
Adopt a lifestyle that will allow you to save at least 15% of your paycheck and still avoid going into debt.
This where a budget really comes into play. With a household budget, you’ll be able to see how well you’re doing each month.
8. Max out employer retirement accounts.
If your employer offers a 401(k) plan, be sure to contribute enough to receive the maximum match amount.
9. Eat at home.
Every meal out costs a significant amount more than the same meal would cost at home. Plan your meals in advance and save money.
10. Comparison shop.
Comparison-shopping can save money and prevent wasteful purchases in the first place.
By taking your time, you’ll have a better chance of finding the best price. You might also find that the urge to splurge has passed by the time you find the best deal.
Shopping around can be half the fun.
How many of these habits do you currently have?
Consider the idea that every money habit you have is either taking you closer to or further from your financial goals.
Are your current habits enhancing your finances or harming them?
Evaluate your habits and rate their effectiveness with a long-term perspective.
Decide to adopt one new habit today!
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