5 Finance Habits to Strengthen Your Wallet and Your Mind

DBabbage | September 8, 2020 | 0 | Boost Your Net Worth

Managing our money is not easy. And worse yet, often no one teaches us positive financial habits and sometimes we find ourselves wondering, what happened to all my money. Luckily, developing good habits and gaining financial independence is possible. It won’t happen overnight but if you follow our 5 finance habits you will fine-tune your finances and be on your way to financial security.  

1. Set Goals

Smart money management requires discipline and hard work. Without clear and achievable goals it becomes nearly impossible to stay disciplined. Setting your money goals lets you work backwards and identify the steps and milestones you need to hit along your journey. Goals can be anything from saving for a house deposit to a vacation to a specific 401k balance.

Having a plan that you can follow with achievements along the way and a goal at the end will keep you motivated and on track. 

2. Budget and Live Within Your Means

We are pressured to spend in our society. Whether its $5 coffee each day, a new outfit or a car. And it is very easy to pay for things on credit. This gives us the sense that we not only can afford to buy things we cannot but that we have to. 

Most people who achieve financial security do not do it by earning 7 figure incomes. They do it by living below their means. Once you have set your goals, you need to assess your current financial position, how much income do you make, and what are your expenses and make a budget. If your expenses exceed your income it will be impossible to save. 

Next, you need to understand the difference between needs and wants. Too often people forget this distinction and end up spending much more than they can afford to. Every dollar you save today will be worth more tomorrow. So ask yourself, do I really need this?

3. Pay Off Credit Card Debt First

If you are currently holding credit card or other debt, paying this off needs to become your first priority. If you hold $2000 of credit card debt with an annual rate of 18% and a minimum payment of 2%, and you only pay the minimum repayment, it will take you 30 years to pay off and your total repayment would be $6,931. 

These debts can be crippling and the cycle must be broken. If you are in credit debt prioritize paying off your debt in full as fast as possible. This will save you thousands in the long run. 

4. Automate Your Savings and Pay Yourself First

Once you have your goals set and have paid off your debt it is time to start automating your savings. Your goals and your budget will dictate how much you should be saving each week or month. Once you get paid the very first thing you should do is pay yourself. If your goal is to save $300 each month, set up an automatic payment from your everyday account to your savings account each payday. This puts your financial goals first. Now you can spend the rest of our money as you please guilt-free.

5. Have An Emergency Fund

We never know what can happen and holding cash in an emergency account can save us a lot of money in the long run. Most people tend to focus on investment goals and think they should always be fully invested. The problem is sometimes you need cash. Not having cash available means taking out debt and that means paying interest.

Set yourself the goal to build an emergency fund of a few thousand dollars. Once you reach this goal you won’t have to use your savings or take out debt for emergency situations. If you do run into trouble and need cash Rightway Funding will have a solution for you.

Your Finance Habits

Your financial future is in your hands. The only thing you need to do is build good finance habits. If you follow these five habits you will be well on your way to lifetime financial security. If you found this article useful check out the rest of our boost your net worth blog posts.