8 Money Habits That Can Help You Feel More Financially Confident
Bad habits are hard to break, but good habits might be even harder to develop. And that’s especially true when it comes to personal finances. Growing your financial confidence takes time, like learning to care for a whole garden, not just a window succulent. But if you can develop good money habits now, you might thank yourself later.
For money-saving habits to take hold, you can work to develop good practices with your finances early on, and remain as consistent as possible in order to help avoid not-so-hot money habits down the road.
Establishing small, healthy habits now is a smart way to get your money organized. If you are able to incorporate at least some of these tips, you may be able to gain more confidence in your financial life.
1. Making a Budget That Works for You
Having a budget that is simple and easy to maintain is key in order to kickstart your confidence with any future finance decisions you’ll be making from here on out. But the most important thing about a budget is finding one that works for you and is organized the way you like things organized.
If you would prefer to digitize the experience and let another system automatically categorize your purchases, look into reputable budgeting apps. Or if you prefer to print off your bank statements every month and highlight your spending in various categories, go for it.
If you feel like you have a decent handle already on your monthly expenses, and just need to take a look at where you stand every month, a simple budget spreadsheet might do the trick.
A great way to start with any budget is to list all of your monthly expenses, including rent, utilities, debt payments, insurance, investments, groceries—but don’t forget about budgeting for more flexible needs like clothes and entertainment.
An easy rule to follow is the 50/30/20 rule , where 50% of your income goes toward necessities, 30% is for personal spending, and 20% is for savings or other financial goals.
2. Automating Your Finances
Consider putting your bills on autopay, but try not to schedule them all for the same time of month! If you owe all of your bills around the same time your rent check or student loan payment goes through, you might end up overdrafting.
Instead, you could try to spread out your bill payments throughout the month, or time a few every couple of weeks to coincide with your paychecks.
Make sure you sign up for email alerts or other reminders for when the automatic bill payment will be posting, if that’s helpful, so that you can still keep track of the money in your budget. Automating your financial essentials can also help ensure all of your bills are paid on time, which as a bonus, may make you more financially confident.
Other things besides bills can be automated, too. If you contribute to your company’s 401(k), you can set it up such that contributions deduct automatically from your paycheck. If you regularly donate to specific charities, consider becoming a monthly or annually renewing member.
You can also create an automatic transfer from your checking to your savings account, or divide up your direct deposit into two accounts, if you want to put your savings on autopilot as well.
3. Using Extra Income Strategically
Whether it’s your annual tax return, a bonus at work, or extra income from a side hustle, consider putting any extra money toward your financial goals first. What you do with your additional cash, of course, depends on what your financial goals are.
If you’re trying to build an emergency fund, maybe that’s where you want to put most of your extra income. Or rather than spending on lifestyle upgrades, maybe you’ll want to focus on paying off debt.
4. Pay Attention to Fees
Spending too much on fees? If that’s a concern, there are alternatives. For example, SoFi Money® is a cash management account that has no account fees (subject to change).
If you have a traditional bank account, maintaining the required minimum balance may also help you avoid certain fees , according to the Consumer Financial Protection Bureau, especially if you sign up for email or text alerts if you fall below a certain amount in your account.
If your current credit card has an annual fee that you’d rather not be paying, consider whether you’re getting enough value out of the card to make it worth it.
5. Making Saving a Priority
When creating money saving habits, it can be hard to know where to focus your newfound energy. Having a financial plan and setting goals can help you when it comes to competing financial priorities.
It is important to have emergency savings, even if you have other financial goals. You want to be able to handle unexpected expenses, without getting yourself into credit card or other debt.
6. Hitting Pause Before You Click Buy
It’s a simple trick but a good money rule and habit to enforce: Instead of buying something immediately, consider waiting until the item has been in your cart for at least 24 hours.
This can help you make sure whatever you are purchasing, especially if you are shopping online, is something you feel you truly need, and you don’t already own something similar. Sure, those email marketing blasts announcing a huge sale are tempting. But you can always unsubscribe!
Small impulse buys can add up, and by waiting to make the purchase and unsubscribing to flash sale emails, you may end up saving some money that could go to your emergency fund or paying off debt.
7. Ignore the Joneses
Remember to keep your big-picture financial goals top of mind. If you’re tempted to buy a brand-new, high-end car, ask yourself whether it’s something you care about financially or it’s something you want because your neighbors have a fancy car.
Spending that’s motivated by comparing yourself to others might not be a good use of your money. Bringing your lunch to work or cutting down on your coffee outside the office might help you save some extra cash every month. But deciding against a big-ticket purchase because you realize you’re only interested in it to keep up with your friends could save you even more.
8. Picking a Smart System to Manage Your Money
Building smart money habits takes time, but establishing ground rules can really help build up your financial confidence.
The better organized your finances are to start with, the better you should be able to handle any surprises when it comes to your financial health. Habits take time to feel natural, so be patient with yourself and commit to trying different methods until something sticks.
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