By Tenika Kirkwood
In life we develop many habits, some good and some not so great. One of the good habits we all try to achieve but rarely succeed at, is developing healthy financial habits. Having healthy financial habits helps to eliminate debt and increase savings. Who knows, you may even be able to afford that holiday you’ve been looking forward to for years! In this article, we have provided some ideas about how you can begin creating healthy financial habits that will stay with you forever.
Creating healthy financial habits
1. Create a budget
Having a budget is a great tool and helps you to manage your day-to-day spending. If you are unsure what to include in your budget, a great tool is to track your expenses for a one-month period. I’m sure many of you would be surprised to see how much you actually spend on those morning coffees! This one month trial will help you evaluate what spending you can reduce or potentially even cut from your budget altogether. There are many great online tools and apps (YNAB: You Need A Budget, QMR: Quick Money Recorder & Good Budget), available to help you create a budget. Putting a budget in place is great, as long as you can stick to it. Be realistic and try to stick to your spending limits.
2. Save, Save, Save
After putting in place a budget, you may find that you have spare money – that instead of wasting, you can now save. To assist with this, you should put in place a savings plan. This involves transferring a set amount out of each pay to a different account. This is a great way to ensure you are moving towards achieving your savings goal each week. If you don’t think you would be diligent enough to do this, you could always set up an automatic transaction from one account to the other.
3. Contain yourself!
One of the biggest problems we all have is spending, spending, spending! I know that when I see ‘those’ shoes, I just have to buy them. For some it is eating out or shopping online that makes you cave. Being able to monitor your impulse spending will assist dramatically in helping you save money and create healthy financial habits.
4. Avoid those credit cards
We are all tempted at times to make that impulse purchase and just charge it to the credit card. We are then lugged with hefty interest charges and bank fees that equate to unnecessary spending. If you have a credit card debt, the first step is to get this under control. By paying just that little bit more than the minimum repayment, you will soon see that debt falling in front of your eyes.
5. Investing in your future
Okay, so many of us that are young and don’t think about what retirement may mean financially – unless we are dreaming about winning the lottery and retiring early! However, it is never too early to get a financial health check to make sure you are doing everything you can now to help plan for your future, including retirement. A quick superannuation check could help save you money on fees or insurances that aren’t adequate. If you aren’t feeling too young anymore, don’t fear, it is not too late. Reviewing your will, insurances and even your superannuation, will help you feel at ease knowing everything is in order. Robertson Scannell offer a free financial health check for everyone, so if this is something you may be interested in, please give our office a call.
There are plenty of ways to help you develop healthy financial habits, so reading other tips online or speaking to those around you about what they do, are great tools to seek out. My advice is simple, but not fool-proof – plan hard, stick to it and save big. Hopefully you will then be able to treat yourself to that something special or that overseas trip you have been dreaming about for years.