Fostering Good Habits Can Save You From Financial Misfortunes
While income significantly influences financial health, your behavior — particularly those related to planning ahead and saving — has a significant impact on your financial health.
Everyone knows that they should create a budget for their spending. It was one of the first lessons my penny pinching parents taught me about money. But honestly, I never liked to be confined by an (often times) arbitrary limit that I basically made up, and fight it day in and day out. It’s mentally defeating each time I exceed the limit and it’s deflating to say the least. Why can’t I stick to my budget?
What I found out is that I can’t stick to a budget because I have horrible spending habits. Period. Too often do splurge on an extra coffee, a meal out because I was too lazy to cook, the extra wires and chargers for my phone because I need one in every room…and the list goes on. This led me to two realizations: one, I was accumulating waaaay to many things that my place was completely cluttered, and two, I spend too much money on things that I did not need.
“Too many people spend money they haven’t earned to buy things they don’t want to impress people they don’t like.” — Will Rogers
I knew that fundamentally, I needed to change the way I thought about money and how I spent it. I needed good habits!
Benefits of fostering habit
Instead of focusing on limiting my spending, I believed that by altering my behavior and fostering the right financial habits, I can fundamentally change how I manage my money. And once I’ve created these habits, I can reap the benefits perpetually as they are now a part of who I am.
When your habits naturally help you save money and limit spending, the stress and burden of managing your finances becomes nil since it’s now second nature to you.
Creating your habits
Your habits are the things you do every single day without thinking. Brushing your teeth in the morning, putting your clothes on, etc. These things are basically a reflex.
If you can create habits that reinforce your financial agenda, you can reach your financial goals effortlessly. And the truth is you probably already have some good financial habits, but you most likely have some bad ones too. Here are some examples of habits that might allow you to make effortless progress:
- Automating your savings: plan to set aside a certain amount of money periodically.
- Increase your retirement contributions: take advantage of all the matching programs that your employer offers. Each time you earn a raise, commit to putting a bit more into your retirement accounts.
- Revisit your bills: do you really need that much data on your phone plan? do you really need 600 cable channels?
- Cooking and packing your food: a simple task that can save you hundreds a month; not to mention much healthier than eating out :)
- Creating a list of the items you normally buy: by doing so, you know generally what your basic necessities are, allowing you to understand your real spending.
- Free activities: there are plenty of activities that are either free or low-cost, like hiking, visiting museums, etc.
The reason these are important is because none of this will require you to set a budget that you have to contend with each day. By fostering these habits, you can help reduce your expenses or increase your long term savings to achieve your financial goals (in a less contentious way than those darn budgets)! Without a fundamental shift in your bad behavior, you are much more likely to fall into financial troubles…but new habits can be formed. This will take time and effort to achieve, but once you have these habits, your road to financial success has just gotten that much easier.
Share if you like the story!