“We are what we repeatedly do. Excellence, then, is not an act, but a habit.” -Unknown
If there’s one thing I’ve learned over the course of my journey to get out of debt and set ourselves up for success financially is that it’s a marathon, not a sprint. You could work all the overtime to finally pay off your debt only to max out your cards again if you haven’t mastered your money habits.
So if you’re wanting to win at finances for the long haul, here are 5 money habits to master.
1. Schedule time to create AND review your budget
Your budget is like the directions your GPS gives you to get to your destination. If you don’t have any directions to start, you’re probably not going to get where you’re going and if you don’t review the directions you probably will get off track at some point. Create your budget before the month begins and then review it throughout the month to course correct if needed.
2. Create a “fun money” category in your budget
Being on a budget is not a punishment. You are still allowed to have fun while budgeting. Plus you’re much more likely to stick to it if you are able to have money set aside for something you enjoy. If you’ve been eyeing a sweater and then it goes on a killer sale, if you have your fun money, you can go for it! Going out to the movies with your spouse, or taking your kids to a theme park are all totally fine to do while on a budget. Remember, this is a lifestyle, not a short term fix. You can still have fun and live your life!
3. Manage the marketing noise
These days marketers are doing a great job of reaching us wherever we are. Managing this looks different for everyone, but if you are tempted by marketing emails, instagram influencers or facebook groups you’re a part of, you have to find a way to quiet that noise. It may simply be unsubscribing, or it could be turning off notifications for the facebook group or unfollowing that person. You will probably find that you don’t miss hearing from them anyways!
4. Set a waiting period for big expenses
According to a study, 8 out of 10 impulse buys were in brick and mortar stores and 23% of men reported an impulse buy of $1000+ while only 11% of women reported the same. One way to create a positive money habit around this is to decide on a mandatory 24-48 hour waiting period on big purchase decisions for your household.
Impulse buying can lead to buyers remorse later, especially for bigger ticket items so setting a waiting period when you’re tempted to make a big purchase can help you decide if it’s something you truly need and it’s within your budget.
5. Have a plan for unexpected expenses AND income
We’ve all had a car break down at the most inopportune time or an unexpected medical expense that derails our budget for the month. Those types of things will always pop up so have a plan for how you will deal with them to minimize the stress when they do pop up. Start building up an emergency fund if you don’t already have one, or build up the one you have if it’s not enough.
Also factor in what to do with unexpected income. I know that may not be something you’ve ever thought of but there may be months you work overtime and have extra money, or when you get a rebate or some kind, or your business has a great month. Plan for when that happens so the money doesn’t just disappear. It should be in line with your goals so if you’re in a debt payoff mode, plan for any extra money to go towards that. Or if you’re boosting your retirement savings, plan for extra money to go towards that.
How else have you shifted your habits in your journey towards healthy a healthy financial life?