Implementing long-term money habits will help set you up for success and lead you down a path of financial security. When you are first starting your journey with money or cleaning up past money mistakes these long-term habits may seem impossible to implement. Some habits will take work but as your financial journey continues to evolve these money habits will become second nature.
Pay Yourself First
Paying yourself first is a powerful money habit everyone should implement as soon as possible. It may seem impossible to pay yourself first when you are living paycheck to paycheck but even setting aside $5 or $10 from your paychecks will begin to add up.
Pay yourself first by setting up an automatic transfer when you are paid. This money will begin to act like a buffer. As you get more comfortable with the money “missing” from your paycheck increase your contribution slightly. This will create a larger buffer for you.
With the money in savings you will be more likely to keep it in savings. If you see the money in cash or in your checking account we are more apt to spend it. Creating this habit with an automatic transfer will help you build your savings on auto pilot.
Avoid Debt
Avoiding debt is a money habit that will help you build long term wealth. If you are currently working to pay off debt you are on the right track. Be sure to no longer use your credit cards so you are not tempted to add to the debt you are already paying off.
Use Cash
Paying with cash will help you spend less money because your emotions come into play with you are physically handing over money. If you are not able to use cash, use a debit card. This is the same as cash meaning you can not borrow against your bank account – you can only spend exactly what you have.
Create SMART Financial Goals
SMART goals are Specific, Measurable, Attainable, Realistic and Timely.
By using the SMART method for financial goal setting you are giving yourself a timeline to reach a realistic goal. You will be able to measure this goal and track your progress toward completing it.
An example of a SMART Financial Goal is “I will pay off $500 on my Chase Credit Card by September 1”. This SMART goal is something that I can measure with a specific time frame attached to it. It is not unrealistic for me to meet this goal and I have the means to pay the debt if I push myself.
Create a habit of writing SMART Financial Goals on a regular basis. This could be 1 big SMART goal for the beginning of the year and then each month or quarter you break it down into smaller SMART goal chunks. Be sure to check in with yourself on a regular basis to ensure you are on the path to reaching your SMART goals.
Have a Plan For Your Money
A budget is hands down the best money habit that you can form. It doesn’t matter if you are living paycheck to paycheck or have $1,000,000 in the bank. A budget is a plan for your money and checking in with this plan on a regular basis will help keep you accountable as well as help you reach your SMART financial goals.
Automate Your Finances
Putting your finances on autopilot is a great money habit when you have the means to do so. I wouldn’t recommend this if you are struggling to pay your bills, but if you are comfortable with your budget and have a regular income automating your finances can reduce your financial stress. You can use your bank’s bill pay system to automate your bills or even set up auto withdrawal with each company you do business with on a regular basis.
When you automate your finances your bills will always be paid on time for the correct amount. You won’t have to worry about underpaying or forgetting to pay altogether.
Be sure to keep track of which bills you have automated so you can cancel that automatic payment if the need arises.
Contribute To Your Retirement
We briefly discussed paying yourself first earlier. Paying your future self first in the form of a retirement account is a great money habit to have as well.
If your company has a 401(k) program or a 403(b) program be sure to look into the specifics. Most large companies will offer a match for your contributions which is a great way to increase your retirement contributions.
You can also look into Roth IRAs which are personally funded accounts. You can do this with an investment professional or even with online companies like Vanguard and Fidelity.
Be sure to consult with an investment professional to ensure you are getting the most bang for your buck when it comes to retirement savings.
Learn to Say No
“No” is a complete sentence and should be used to protect your money. If you are asked to spend money on something that does not align with your values and your financial goals it is okay to say no.
Saying no can also be saying it to yourself when you want to make a quick run to Starbucks or see that pretty new shirt at Target. Having self control while shopping and telling yourself no is a great money habit to have. To jumpstart saying no to yourself and impulse purchases try to have a no spend month.
Read: Ultimate Guide to Surviving a Spending Freeze
Stop Keeping Up With the Joneses
You know that one family on your social media who seems to have it all together – a shiny new car, perfect family, beautiful house with the picket fence, multiple vacations per year, designer handbags etc – this is the Jones family. Most Jones families are tapped out financially with credit cards maxed out, lines of credits, multiple mortgages, car loans etc. Most Joneses are stressed out and on the brink of financial ruin. This is not who you want to keep up with.
Create a vision board for your family of what your ideal (and realistic) life looks like. A debt free version of this ideal lifestyle on your vision board is what you are striving for. You don’t need all of the fancy things to live a happy and financially secure life.
Implementing These Money Habits Will Set You Up For Success
As you continue on your money journey and start implementing these long term habits you will begin to see a shift in how you approach your spending and saving. You will start to align your money habits with your long term goals and the bigger vision you have. Pick just one of these long term money habits and get started today! You can add other habits as you see fit.
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