4 Good Financial Habits to Develop

Tuesday, February 10th, 2015 by Natalia

Financial_Habits

“We are what we repeatedly do. Excellence then is not an act, but a habit.” Aristotle. This quote has profound meaning for your financial life, because it means that even if your savings are up not to scratch or if your debt level is extremely high you can change the course of your financial future by slowing but surely changing your financial habits.

The secret is to start implementing small changes into your life and work them into your routine. Repetition will help to make them your new habits and you can then start reaping the rewards of healthy financial practices. Take a look at these 4 financial habits you should strive adopt.

1. Start Budgeting Now

Creating a budget is not difficult. All you need to do is to identify your sources of income on one side and then list your fixed and variable expenses on the other. It is recommended to keep your fixed and variable expenses separate so it is easier to highlight possible areas for cutbacks. If you are not sure of where your money is spent you may need to do a little ground work to draw up your first budget. Start by making an effort to write down every time you spend money and start keeping your receipts. At the end of the month you can categorize your spending and then fill in your budget.

2. Use Goal Setting to Improve Your Financial Scorecard

Goal setting is important for improving your finances because this act gives saving direction and purpose and thereby makes it easier to part with your money now, for some reward in the future. For instance, if may feel like punishment to tuck away $1000 a month just because it is important to save, but if you were to attach a goal to this figure it would become logical. So you might rationalize that you need to put $500 towards an emergency fund while $500 should go towards your next vacation. All of a sudden, putting away $1000 is easier.

3. Save for Retirement

Everyone needs to plan for their golden years. If you haven’t yet started up some form of retirement savings, there is no time like the present. You should also note that it is never too early to start. You can check how much you are allowed to save tax-free and at least make sure you are maximizing this amount. If your employer gives a match for retirement savings, always take this up and consult a profession if you are not sure about this aspect of financial planning.

4. Keep Your Debt Under Control

If you have a problem with keeping your debt under control you should make this a priority. Start implementing measures to pay down outstanding debt, especially if that debt comes with extremely high interest rates. Allowing interest to accumulate even more interest is a sure-fire way to end up moving in the opposite direction of financial prosperity. To get a handle on your debt situation, make sure you have a strategic plan for pumping your available funds into making debt payments.

It is never too late to implement some good financial habits. All it takes is the desire to change and the dedication to stay on the course.

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2 Responses to 4 Good Financial Habits to Develop

  1. Pingback: fwisp.com

  2. heaps! says:

    One thing people tend to forget about budgeting is that it has to conform to your specific needs. Budgeting will not work if one is going to set it up blindly and not leave any funds for fun or any breathing room. So it is good that you mentioned tracking expenses as a way of setting up a budget.

    And the best way to stay out of debt (that I can think of) would be to create a shopping list before you go out. If you come across something that you essentially ” must” have, it is a good idea to wait about 24 hours to see if the impulse dies out.

    Cheers,
    Wahid

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