Becoming financially independent is a difficult but worthwhile endeavor, so keep reading for some better money habits you can commit to so you can reach your goals.
In this article:
- Tracking Your Spending
- Saving Before Spending
- Setting (and Sticking to) a Budget
- Not Keeping Up With the Joneses
- Only Shopping in Sales When You Plan on Buying Something
- Doing Your Homework
- Breaking up With Your Credit Card
- Unsubscribing to Marketing Emails
- Investing On Yourself
- Packing Your Own Lunch
- Setting Reasonable and Specific Financial Goals
- Using Coupons
- Saving on Utility Bills
- Curbing Emotional Shopping
- Earning More Money
Better Money Habits You Can Start in 2020
1. Tracking Your Spending
Without knowing where your money goes, you may not know if you’re paying the right amount for the things you buy. The goal is to spend less than you earn as much as possible.
Reviewing your expenses helps you know where exactly you spend the most amount of money on so you know where to cut corners. You can do this with a pen and paper, or you can use a finance management app that makes this task easier for you.
2. Saving Before Spending
Set your bank account to automatically transfer a certain percentage of your paycheck as soon as it hits your account. Better yet, create a savings account in another bank that uses a passbook instead of the ATM to make it less tempting for you to withdraw money.
As early as now, set aside some money for your retirement fund, too. The earlier you start, the more rewards you can reap.
3. Setting (and Sticking to) a Budget
Having a plan for spending your money helps you build better money habits and prioritize the goals that matter to you. An example of a good financial plan can be getting out of debt or saving for a retirement fund.
Putting this in place makes it easier for you to decide if you should continue going on that daily coffee run or just make some at home.
4. Not Keeping Up With the Joneses
Buying expensive stuff is one thing. It’s another to do so to keep up appearances (and is a surefire ticket to financial disaster).
Needs are the things you need to survive (like food, rent/mortgage, Internet, especially if your livelihood depends on it). Wants are those that are nice to have but you can live without.
When it comes to spending for your wants, choose one to focus on and plan your spending for it. Once you reached that goal, buy that item as a reward for yourself.
5. Only Shopping in Sales When You Plan on Buying Something
You don’t have to buy everything that’s on sale. Otherwise, you’ll end up with lots of junk just sitting around.
Ask yourself if you’re really planning to buy that item if it weren’t on sale. Then, wait for a deal to pop up so you can save money.
6. Doing Your Homework
If you plan on buying big items such as a new washer or computer, do your research on which is the best one to buy instead of getting the first one that appears on a commercial or ad.
Do a bit of price comparison and check reviews online before committing to a purchase.
7. Breaking up With Your Credit Card
Credit cards are a great tool when used properly, but if you’re like many others with poor financial habits, getting rid of your credit cards might the best option.
The mountain of debt is a big reason why people live paycheck-to-paycheck. Keeping your credit line out of your sight lessens your temptation to treat it as “free money.”
8. Unsubscribing to Marketing Emails
Marketing emails constantly talk about the latest sale they just launched. Be merciless in hitting “unsubscribe” to those emails so they don’t pull you in to spend more money.
Not ready to hit the kill switch just yet? Create a filter that automatically filters out your emails to check out later on when you can be more intentional about them.
9. Investing On Yourself
Investing in yourself can have a massive payoff. Some ways to do this include:
- Developing your skillset: This doesn’t have to be in the form of formal training. You can use books, YouTube videos, and other free resources to enrich yourself.
- Improving your health: Invest in good quality food, make time for regular exercise, and learn when to push yourself and when to stop.
- Explore your creativity: Explore multiple hobbies like art, music, and nature.
10. Packing Your Own Lunch
A $10-$15 meal may not seem much, but on a larger scale of things, it can add up. Devote one day each week to do your meal prep and save more money in the long run.
Don’t forget to brew your own coffee too. Control the coffee you drink and improve your money habits at the same time.
11. Setting Reasonable and Specific Financial Goals
Building a retirement fund within a year isn’t reasonable, but saving $1000 in three months can be. Your financial goals should be specific and measurable enough so you can track them yourself.
Better money habits don’t rely as much on big goals as they do with consistent activity.
12. Using Coupons
There’s no shame in getting good deals. Sit down and go through all the coupons you have and plan your shopping so you can use them.
13. Saving on Utility Bills
The little things add up when it comes to your utilities. Here are some ways you can save on them:
- Turn off and unplug electronics when not in use.
- Use the smallest pots and pans when cooking.
- Wash clothes with cold water.
- Switch off all lights before leaving a room.
14. Curbing Emotional Shopping
When you let emotions dictate your spending habits, you spend a lot more in the long run.
- When you get the urge to make an impulse purchase, wait for 24 hours and see if the urge goes away. If it doesn’t, plan for it.
- Block out as many advertisements as you can, both online and off.
- Look for activities that don’t involve shopping, like going on walks.
15. Earning More Money
The best, but probably hardest, way to get more money is to find ways to earn more. Getting a new job is an option, but you can also start a side hustle or use a small amount of capital to start your own business.
Forming better money habits is a good thing to do no matter what year it is, but it isn’t easy. Start with any one of these habits and build up until it becomes second nature to you.
What money habits are you committing to this year? Share them in the comments section below!