Financial habits – easy come, not so easy to stick to
Saying you’re going to change your financial habits is easy – sticking to your new resolutions is harder. In the words of Mary Poppins: “No pie crust promises. Easily made, easily broken.” But building sensible financial habits into your daily routines is just about the most transformative way to change your attitude to money and begin building your wealth. You can make a start by implementing a household budget and keeping track of your money but changing the way you behave is the most positive thing you can do to secure your financial future.
Any habit – once it become ingrained – can either help or hinder us on our way to meeting our goals and changing the way that we are perceived by others. Bad habits that might hold you back include spending too much time on social media, smoking, overeating or talking over everybody else. Instead of focusing on these, try focusing on financial habits that will have a beneficial effect on your life, your finances and your stress levels.
Here are 10 financial habits that will change your life:
- 1. BECOME A DIE-HARD DISCOUNT SHOPPERLearn to haggle and demand a discount on everything. If an item that you want isn’t on sale, then demand it anyway. Don’t take any price at face value: learn to request a better deal on anything. If you’re easily embarrassed, remember that when you are told “no”, it isn’t a personal rejection.
- 2. SAVE 10% OF YOUR INCOMEFor this to work and not fall victim to short-term spending urges, you’ll need to have an investment account with rules preventing you taking money out whenever you feel like. And you’ll also want to make sure that money is transferred into it from your current account by standing order.
- 3. AUDIT YOUR BILLS EVERY MONTHGot a gym membership? Or a Netflix account? How many times do you actually use these? You wouldn’t have a car sitting on the drive you never use but many are happy throwing money away on subscriptions we barely use. Get rid of one subscription every month
- 4. GET ORGANISED!Bills are boring and you never open them because they're on direct debit. Not opening your letters, reading them, dealing with them and then filing them is a terrible financial habit and is the sign of somebody who doesn’t place much value on their financial future.
- 5. KEEP ONE EYE ON YOUR GOALSWhat do you want out of this exercise? A deposit on a house? A car. Becoming debt free? Just as the runner visualises winning the big race, so you need to picture what success looks like to you. Most experts recommend a five-year plan with specific goals for the short, medium and long term.
- 6. THINK ABOUT RETIREMENT RIGHT NOWIf you’re in your 20s or 30s, then retirement can seem like a lifetime away. But it isn’t – as anybody in their 50s or 60s will tell you, life goes into fast forward the older you get. The key to a comfortable retirement is to start saving at the youngest possible age.
- 7. GET OUT OF DEBTDebt is normal and a vital piece of the financial jigsaw. But too much of it can be bad and interest could eventually overwhelm your budget unless you start making a concerted effort to reduce it. Many experts recommend that you put 10 per cent of your income into paying back debt.
- 8. ALWAYS ASK: "DO I NEED THIS?"Instead of seeing something and thinking, “I want that”, retrain your mind to ask, “Do I need it?” Start investigating your motivation when it comes to purchasing new things. Then the real treats that you buy for yourself and your family will be so much more meaningful.
- 9. TALK TO AN EXPERTYou wouldn’t carry out surgery on your children without having had years at medical school. There are plenty of occasions during life when it pays to consult a financial expert – somebody qualified and independent who will help to keep your finances on track and make it easier to see the big picture.
- 10. INCREASE YOUR EARNING POWERThe most successfully financial people don’t rely on one job. They have diversified income streams. Diversifying your income will also make you less reliant upon a single job and will help you weather the inevitable financial downturns that come along every five years or so.