“It’s the little ways you show up for yourself everyday that create the big shifts you’re looking for.”
Habits are the cornerstone to success in all areas of our lives, and they are often overlooked in regards to personal finance. More often than not, we want to see big change in our lives immediately, forgetting that big change comes from daily habits.
To me, habits are the little ways I show up for myself every day. Habits are what I do daily that make me feel good, inside and out, and make me feel like I have control over my life when I can control so little about the world around me. In fact, daily habits have been huge in helping me manage anxiety and channel anxious thoughts into positive action.
Developing healthy financial habits can help us reach our long-term financial goals faster, and with what feels like less effort and struggle. Making a budget, paying bills on time, and managing your expenses means you are competent with personal financial management. But, it doesn’t necessarily mean you have healthy and productive financial habits that will lead to long-term success.
Here are 5 small habits to build into your routine that will help you become better at managing your money, more efficient at making important financial decisions, and boost your personal finance knowledge so you can find the financial success you’ve been looking for.
5 Financial Habits
Check in with your finances on a set schedule, rather than “whenever”
Creating a schedule for checking in on your finances is critical because it helps to build a regular habit or routine. Having a set time where you review or update your budget will aid in tracking your progress over time, as well as bring awareness to your regular spending patterns. Financial health stems from awareness, and progress in any other area of your life is likely accelerated when you set a schedule. For example, if you were training for a marathon you’d likely have a training schedule where you run a few times a week, do cross training, and stretch. Same goes for your finances; if you want to reach a big goal, you need to schedule your training meetings into your week.
2. Track expenses as soon as they happen
This isn’t always feasible, but tracking expenses as soon as (or on the same day) they happen holds you accountable in two ways:
You won’t forget about it later on
You have to actively acknowledge spending the money as it happens
If you aren’t tracking expenses, it can be a lot harder to derive insights from your budget and if you are even adhering to the budget you set forth in the first place. On a daily basis, it doesn’t take more than 5 minutes (and that’s being generous) to update your budget if you spent money. I even have an incredibly simple tool, The Personal Finance Dashboard, that makes it super easy and quick. Treat it like a routine; do you brush your teeth every night? It takes longer to do that!
3. Spend 10 minutes a day educating yourself on personal finance
Knowledge is power! Educating yourself on principles of personal finance can come in many shapes and forms. Whether it be picking up a personal finance book (I love The Millionaire Next Door), or following a few Instagram accounts, or reading an article a day online (like this blog post!), taking the time to learn will transform the way you view money. The world of money management is endless; you can never learn enough. None of this is taught in school so the power lies in your hands.
4. Set up automatic savings from each paycheck
Automatic savings can help you save more than you think, because it’s money you never even see. I set aside a % of each paycheck to automatically go into my high-yield savings account. It doesn’t matter how much it is, even $10 can make a difference if you stick to it long enough. Remember, out of sight, out of mind! So set this up and make sure this is part of your financial routine.
5. Focus on progress metrics, rather than income/expenses only
It is so easy to get caught up in just looking at your income and expenses; trust me, I’ve been there. But you know what metrics are more important? Your savings rate. Your net worth. Your progress towards specific savings goals. Start tracking these as well, at least on a weekly basis. If you track your expenses^^ it becomes super easy! Not sure where to start? All of these metrics are included in The Personal Finance Dashboard, so make sure to check that out.
The best time to start developing good financial habits is right now. Making daily and weekly rituals surrounding your personal finances and money management will enable you to find the long-term financial success you are looking for. Remember, money is a tool you can use to create and perpetuate opportunity throughout your life. The earlier you start, the easier it becomes to accomplish whatever you want!