I’ve recently been researching some of the best money habits to help my readers and you will love what I have found. Of course, these good money habits to adopt will help you plan your finances and pay down debt if you can learn to change bad money habits.
You see, managing money isn’t easy, for most, but with some simple tweaks to your habits, you can simply retrain your brain to handle money well and become a money magnet.
If you struggle financially, chances are you have picked up some bad money habits along the way. Often we have limiting beliefs pertaining to money that if are not recognized and changed can affect the way we handle money our entire lives.
If you grew up hearing “We can’t afford that.” or “I don’t know how we are going to pay for that.” -a scarcity mindset has been ingrained in your thought process. Therefore, it is beneficial to adopt good money habits and change your train of thought and relationship with money.
However, it is not always easy to change a habit, and often our brain doesn’t like the “change” which leads many to give up before achieving their money goals.
Yet, I’m about to “brain” geek out on you here and tell you that your brain has an attribute called “brain plasticity” and in my research about habits, I have found that the brain can change with a little bit of repetition.
This is great news for all of you trying to change your money story and adopt good money habits. Know that It CAN happen and it can happen fairly quickly if you put the 15 good money habits in this post to use ASAP.
In my studies on habits, I’ve found one of the best ways to change is to take massive action. These 15 steps will get you started and will leave you with more money in your wallet, not just now, but for the rest of your life. This is life-changing, my friends.
Good Money Habits to Adopt Today
#1 Positive Money Affirmations
Use positive money affirmation to change your money mindset. You see, many of us were raised hearing things like “We can’t afford it.” or “Money doesn’t grow on trees.”
Most of these sayings leave us in a “mindset” of scarcity. However, unless we consciously work on changing our “money mindset” we will continue to live in scarcity instead of abundance.
Most of us live in scarcity deep down in our subconscious mind and don’t even realize it. I know this because I too, lived this way.
So start today by using some positive money affirmations. I’ve left you with a few to start with below.
- I am worthy of all this is coming to me.
- I am a money magnet.
- Money flows to me freely and easily.
Say them to yourself every morning and every night. Repetition is key if you want to change your money mindset. Remember, you deserve to have money and there is plenty of money to go around.
#2 Track Spending
Start tracking your spending to see “where” your money is going and just how much money you are spending. Being in the “know” about your money is key to adopting good money habits.
You cannot be intentional with your money if you don’t know where you are spending. I suggest tracking your spending for at least two weeks to get a good picture of your money habits.
Use this free-spending tracker here!
#3 Create a Budget
Once you have a good idea of how much you spend, try creating a budget.
Jot down your take-home pay from your last two paychecks (if you are paid weekly).
Use this as your starting point.
Write down your bills and subscriptions, noting any quality or annual bills (divide by four or twelve to get your monthly payment).
Don’t forget your grocery and entertainment spending.
Subtract this from your take-home pay.
You can use this free worksheet to get you started.
I know, I know… Budgeting doesn’t sound like fun and it seems downright hard. That’s why I have created a family financial pack for you that includes a budget. You can pick it up in the I Heart Frugal Printable Shop.
Pin me for later:
#4 Cut Out Splurges (within reason)
Once you have a clear vision of where your money is going, try to cut anything you don’t need. I recommend cutting things “within reason” because, of course, you can’t cut everything. I am a firm believer in spending money on things that are important to you. If you love coffee, spend money on coffee. If you love clothing, spend money on clothing. However, once you realize what you love, learn to cut back on everything else. That is where being “frugal” comes into play.
If you are in debt, I recommend cutting out splurges altogether, but once you start to pay down debt, you can start adding those times back in.
#5 Build An Emergency Fund
An emergency fund will help you stay out of debt and keep your finances on track. Let’s face it, emergencies are going to come up and you want to be prepared.
You just never know what is going to happen, so it is best to be prepared. One emergency can send you into a debt whirlwind.
Start saving for emergencies now so you will be prepared. This will help eliminate money stress and help you feel financially confident.
Have you heard of the 30-30-30-10 Budget rule? Check it out here!
#6 Save Up
If you really want something that costs more than $100, save up for it. You can use sinking funds or a good ole fashion glass jar. Put money away each money and you will really appreciate your item more when you are able to buy it.
#7 Practice Financial Discipline
Your brain is like a muscle and you can train it to be more disciplined with money. The next time you go shopping, before you check out, put one item back that you know you “really” don’t need.
Start small and build your financial disciple. Learn to stop buying things on impulse.
Of course, this will not happen overnight, but if you can learn to put things back while shopping and stop yourself from making an easy online purchase, eventually you will continue to change the way you spend money and it won’t be so hard.
#8 Invest Small
If you are not used to investing, you can start by investing a small amount. You may be asking, “is it worth it?” The answer is yes because if you are not investing anything at all, a small amount is definitely better than “no” amount.
How do I invest only a small amount?
You can use a popular app called Acorns.
Acorns is an app that invests your spare change. For example, the next time you buy a coffee at $4.50, Acorns will round this amount up to the nearest dollar and the extra $0.50 will be invested.
In this way, you are making investing super easy and you don’t have to think too much about it.
As you watch your money grow, you can try your hand at investing larger amounts.
Acorns makes it easy for the average “non-investor” to invest using a small amount of money so it is less scary.
Why not give it a try and begin growing your money?
Sing up for Acorns here!
#9 Invest More
Once you have the basics down, you can add them to your portfolio. You can also do this the way way, but signing up for Personal Capital. This is an app or website that will help you develop an investing strategy. You can invest in “safe” funds and begin to grow your money even more.
Remember, you got started with Acorns above, so the bigger stuff will seem easier when you are ready for it.
You may still be scared of investing and I don’t blame you. It is scary to think of losing money. This is where your new mindset comes in. Remember, you are a money magnet.
The only real way for you to grow your money without starting a business or buying real estate is to invest in the stock market.
Try investing in index funds and have a small percent of your paycheck go into your investment account so it is automatic.
You only have to set it up once and pick your funds.
You will see it is not as hard as you think.
Sign up for Personal Capital here and get started
#10 Save for Retirement
Saving for retirement is as easy as ever. If you do not have a 401k or 403b through your job, you can set up a Roth IRA yourself. I personally like Fidelity and the perk of a Roth IRA is there is no penalty for withdrawing your money early. You also do not need to pay taxes on this, since the money was already taxed, unlike a 401k or 403b.
#11 Create Sinking Funds
What are sinking funds? Sinking funds are funds set aside for a specific purpose such as a “wedding fund” or a “house fund.”
You can read more about sinking funds here in another post I wrote.
Use sinking funds to help you set aside money for a certain purpose.
Why does this work?
If you set money in a separate account, you are less likely to spend it.
#12 Destroy Debt
Conquering debt is a must when you decide to adopt good money habits.
You can get rid of debt by paying more than the minimum requirement each month on your debt.
Try using the debt snowball method, which I talk more about in this post.
Basically, you start with your smallest debt and pay it off first. Then use the money you were paying on that debt for your next debt, adding more to each payment after the first said debt is paid off.
Why this method works…
You feel a small sense of accomplishment once you have paid down the first debt. You have more motivation to keep going.
Some argue you should pay down the debt with the highest interest, as you will end up paying less overall. Of course, It is up to you to choose the best method, but I like the debt snowball payoff method because you see your progress which helps you to stick with it.
#13 Never Go Into Debt Again
Once you pay down debt, make sure to save up at least six to nine months’ worth of monthly bills, in case of job loss or an emergency. Once you have six to nine months of expenses saved, save even more.
Set up a “rainy day” fund for expenses you know will come up like car and house repair. That way, you have the money and don’t have to worry about using a credit card.
#14 Cut up Cards and Pay Cash
You can also try the cash envelope system and pay cash instead of using credit cards.
Set aside labeled envelopes including the following:
These envelopes will help you use cash instead of credit cards. The thought here is that if you only have so much money in your envelope, you will stay on budget.
#15 Live the Good Life
Now that you have adopted good money habits, you can start living the good life. You will see you don’t have money stress and you can live more and spend more, once you have your budget under control and your debt is gone.
Good Money Habits to Adopt Conclusion
These are 15 good money habits you should adopt to start paying off debt, saving more, and living better. Get started investing the easy way and build from that confidence so you can start investing more and saving for retirement. Eliminating money stress and changing your money mindset are both keys to living the “good” life. You will see how good it feels to live debt-free and continue saving so you can spend more later and enjoy your life!
Thanks for sticking around to read the entire post! Take care and leave a comment if you have any other suggestions so we can all learn from each other!