3 Good Financial Habits to Be Aware Of
With the economy’s uncertainty lately, many people are focusing on their personal finances more than they have in recent memory. Many are trimming back nonessentials, squeezing pennies, padding the savings account a little more than usual, and engaging in other “just in case” practices.
Whether it’s the economy or you want to be more fiscally responsible, there are almost always tried and true habits that you’ve yet to implement. While we can’t guarantee that these will work for your unique situation, we found three habits we wanted to share in hopes of helping you along the way.
3 Good Financial Habits to Be Aware Of
Set Meaningful Financial Goals
First and foremost, you have to set measurable and achievable goals. Without these, there’s no way to track your progress. Whether you want to save enough to explore the benefits of investing or purchase a new car, having incremental goals can help you achieve them.
Everyone from medical bill review companies to multi-billion dollar corporations agrees that a tried and true tip is to utilize the S.M.A.R.T. method:
- Specific
- Measurable
- Achievable
- Relevant
- Timed
This could be something as simple as “Pay off my car in 6 months” or as lofty as “Increase my net worth by $20,000 within 12 months.” Stay away from vague things like “get a new car” or “make more money”, and set measurable goals. This way, it’s easy to keep track of what you’ve accomplished while holding you accountable for your deadlines.
Update Your Financial Plan Regularly
While the best financial habit is having a plan for your money, simply creating an initial one isn’t enough. You have to ensure that you review and update it regularly.
While you may be considering a debt consolidation loan for one month, things can definitely change within a short space of time, and you may have a surplus of cash that can help you achieve some of those goals much faster. In addition to reviewing your financial plan at least once a month, you should update it any time you have a significant life change, such as getting a new job or purchasing a home.
Create a Budget
Yeah, you’ve heard this one time and time again, but have you ever really taken it to heart? You may not need a budget management app; without a solid budget in place, it’s hard to know what’s coming in versus what’s going out. This can lead to spending more than you make, and that’s always a recipe for disaster.
Make a list of what you bring home each month and how much you generally spend on necessities like grocery delivery, rent, utilities, etc. Next, you can determine how much you want to set aside for things such as eating out, going to the movies, or treating yourself to a manicure and what can be earmarked for savings.
When it comes to making a budget, the main thing to remember is that you need to make one that makes sense for you. If you can comfortably save 20% of your monthly income or use it for investing in international stocks, you’re going a long way toward setting yourself up for financial success! If you’re spending too much on weekend nights out, you’ll see it in black and white.
When it comes to financial habits, there is a lot that can help you realize your overall ambitions. However, the above three tips are generally considered the “golden trinity” of sorts, meaning that without them, your financial hurdles may stay in your way for the foreseeable future.
