It takes 21 days to create a good habit. We have all experienced the struggle that comes with setting goals such as exercising consistently, eating well, or breaking a bad habit. Perhaps the biggest obstacle blocking your success was that you did not make it past those 21 days. Once you get past those initial 21 days, you will have succeeded in creating a new, healthy habit. That, along with determination, is all it takes to have financial success.
Here are habits you can begin practicing today to begin your journey towards financial success.
Habit 1: Finance Check-Ups
Just as we shouldn’t skip our annual check-up with our primary physicians, it is important to check in with your financial situation and be fully involved in your money management. You should be aware of:
- Changes in spending habits
- Income fluctuations
- Actual spending versus budgeted spending to determine overspending, which leads to debt
- Timely payment of bills
- Whether or not accounts are correctly balanced
- All fees (and making sure they are correct)
This habit is crucial to attaining financial success. Without this foundation, you will not be able to establish additional healthy money habits. Invest time in carefully reviewing your financial situation before proceeding on to the subsequent habits.
Habit 2: Spend Less Than You Make
This seems obvious, doesn’t it? If you spend more money each month than you are making, you will continually accrue more debt. Although it may seem harmless to overspend one month, this debt can easily become an insurmountable number and force you to dip into savings designated for the future until there is nothing left. Avoid this at all costs. For many people who already find themselves in that situation, there are two solutions: spend less or earn more. If you have carefully implemented Habit 1, then you can achieve financial success by banking additional cash from raises. If you get a raise, avoid the temptation to “keep up” with others around you. The easiest way to effortlessly spend less than you earn is by pretending that that raise never happened. If you don’t have it, you won’t spend it.
Habit 3: Pay Yourself First
Having financial success requires willpower and support systems for days when you want to let that willpower go.
Paying yourself first means that you put money into your savings account before anything else. This means you treat paying yourself like paying a bill, as if you were your cable bill or rent. Once you pay yourself, you cannot use that money to make random or unnecessary purchases. Establishing this habit will allow you to adapt to paying yourself first and your savings will snowball without any additional effort from you.
Habit 4: Avoid Buyer’s Remorse
Do you really need that newest gadget? The answer is probably no, but want versus need is an increasing struggle for people who take on consumer debt. Here are some purchases the cause the most buyers’ remorse. The good news is, once you learn how to determine if the purchase is out of habit or need, you will be able to make smarter choices in your quest towards financial success. Here are some questions to ask yourself before making a purchase:
- Can I name a positive reason for making this purchase?
- What will I need to give up in order to buy this?
- If I wait and buy this later or at another store will I get a better price?
Asking these three questions before giving in to instant gratification will help you realize whether or not the purchase is truly necessary.
Habit 5: Plan for Your Debt
Creditors love people who simply pay the minimum amount on their debt each month, as this is in their best interest. If you only pay the minimum amount, you are allowing creditors to collect large amounts of interest and therefore paying double or triple what the purchase is really worth. Instead of following the repayment plan set for you, take charge of your debt and determine how much you can afford to pay each month, taking into consideration that you should pay more than the minimum due. This will allow you to set your timeline to become debt free and achieve financial success. Regularly check your debt payment progress, revisit and revise your strategy, and make sure you are in the driver’s seat when paying back your debt.
Remember to be patient with yourself as you work towards financial success. Be persistent in those first 21 days while creating your healthy financial habits, but allow for setbacks, too. With perseverance, it is possible to achieve your financial goals.