Financial Habits to Start Now

Touro College
Aug 24, 2017 · 3 min read

by Angelo DeCandia

Remember when you were a kid and learned about good habits and bad habits — the ones to strive for and the ones to avoid? But what exactly are habits? One definition is “an acquired mode of behavior that has become nearly involuntary”. That’s good since it’s something we can develop. A habit once acquired is involuntary as in we don’t have to work hard to maintain it. But does this apply to things financial? You bet it does, and many financial habits can be developed when you’re young, meaning right now. Here are three financial habits that you should start today and you’ll see the benefits for years to come.

1. Neither overspend nor under-save — After living the frugal scholarly life throughout your school years, it‘s only natural to go crazy once that first paycheck arrives. Okay, get it out of your system. Shortly after, however, ask yourself whether you need to eat out that often. Or if that jacket, so trendy now, will be wearable in a year. In other words, think before you spend. Avoid the frivolous purchases where you spend without thinking. Once you’re in the habit of carefully managing that paycheck, you’ll suddenly discover excess funds, a phenomenon known as savings. Who knew?

2. Set up a budget — Now that you’re thinking about your spending habits, let’s take it further and formalize the process. You don’t have to create some fancy corporate spreadsheet (unless you want to). Simply get in the habit of recording what you spend. You know, rent, phones, loans, and then maybe restaurants, coffee, etc. Once you start, you’ll see a picture that turns out to be you … the financial you. And at this point, you’ll be intrigued enough to start a more formal process. Budgets are half the reason spreadsheets were invented and today’s technology makes it a whole lot easier.

3. Learn the Basics of Investing — Now that you’ve got things under control and you’ve accumulated some savings (remember?), learn how smart people invest their savings to generate higher yet safer returns. This doesn’t mean throwing money into the market based on your cousin’s stock tips. It’s more about being knowledgeable and prudent. The good news is there are online companies to help you. The days of smooth talking stockbrokers have given way to educational sites such as Acorn, Betterment, or Wealthfront that ease you into the investment world while simultaneously educating you on your options. It’s not a gimmick, but rather a better way to market a valuable service to skeptical millennials. Check out these sites, and you’ll be pleasantly surprised at what you find.

Spend less, save more, develop a structured financial life, and put your savings to work. If you start slowly and stick with it, your financial picture will be running on auto-pilot. Soon you’ll see how good financial habits make you feel calmer and more secure.

Angelo DeCandia is professor of business and accounting at Touro College

)

Touro College

Written by

Where knowledge and values meet. Touro educates, serves and supports diverse communities, making world-class opportunities available to all members of society.

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade