Adopting Good Financial Habits

People can often run into financial problems because of poor decisions that compile over time. Bad financial habits can keep you swimming in debt, creating financial stress and can often lead to other issues within your family and even affect your work. Good financial habits can take years of experience to develop however, below are some handy tips to help you take control of your spending and help adopt some good financial habits in your life.

Pay Your Bills Ahead of Time

Paying bills late can often incur additional charges which is money that could be in your savings account each month! If you struggle to remember what is due when, grab a copy of all your bills for the past 3 months and create a spreadsheet of due dates. You can create calendar reminders 1 week prior to remind you to make the payment. Another option is to future date or schedule payments for the due date when you receive your bill, the payment will come out automatically on the day you set.

Redundant Spending

Do you have a mobile phone and a landline home phone? Is it necessary? Do you pay for Foxtel and streaming services? Do you need both? Are you and your partner/family all paying to stream music separately? Redundant spending is a matter of not making the right choices with the products and services you buy, which causes you to spend money that you do not need to spend.

Do an audit on the services that you currently have and get rid of any service that is redundant. Before you purchase a product, think about whether you already have a product that can do the same tasks and save yourself the money.

Learn to Say “No” to Yourself

Taking control of impulse buying is difficult, you’re out somewhere and you see some item you like, you buy it because it doesn’t cost much. The ability to purchase items online nowadays and have it delivered to your doorstep in just a few days, makes shopping something you can do in your lunch break.  If you do that several times a week, the spending can really add up.

Simply making 10 impulse purchases (yes that includes coffee) a week at an average of “only” $5, adds up to $50 spent on stuff you really don’t need. That’s potentially $200 a month which isn’t going into savings, investments, or to paying down debt.

Try enforcing a “72 Hour Rule” on purchases, especially online items. After 3 days you should get a good feel whether you really need the item or if you just want it (and don’t need it at all).

Learn to Say “No” to Your Kids

If you have children, learning to say “no” to them is doubly important. Kids are always wanting something, whether it simply be a drink while you are out at the shops or the latest toy. That “something” tends to get more expensive as they get older.

This doesn’t mean depriving them of birthday or Christmas gifts, or things they truly need. Rather, it’s about their own impulse buying – seeing something and wanting it – but instead, using your money.

The second issue is even more important.

How you spend money, particularly how you spend it on your kids, has important implications for your children’s attitude toward money as they grow. Saying “no” isn’t always easy however, it’s a way of teaching important financial lessons and embedding good financial habits in them early.

Track Your Spending

If you don’t have a budget, then you probably don’t know where all your money is going. This is one of those good financial habits you absolutely must adopt you if want to get control of your finances.

Tracking your spending will help you identify the areas of excess. Eating out for 50% of your meals? Cut that back to even 25% and you’ll have a nice chunk of change to contribute to paying down debt or building up your savings.

Don’t harp on mistakes

It happens. When we try to create new and better habits for ourselves, we can sometimes slip up. It can be difficult to stay disciplined and doing it on your own can be even harder. What’s crucial during the process of forming good habits is to not let yourself be derailed by mistakes. If you use your credit card or make an unnecessary impulse buy, remember that improvements take time, and you must be persistent.

Just like having a personal trainer at the gym to help keep you on track and motivated, having a financial adviser by your side means you receive that additional support to help you achieve your financial goals. If you need help becoming financially free, get in touch with the team at JBS.