Most people are willing to change their habits for the benefit of their physical health, but what about your financial health?
Have you ever considered that your daily habits are greatly impacting your financial future? It’s true. While you won’t make or break the bank in one day, a series of bad money habits can easily take months to recover from.
While everyone is interested in making money, many people miss out on the conversation of how to protect it and allocate it. If you want in on that conversation, you can check out Reddit’s finance-related message boards.
In the meantime, here is a rundown of the most effective three ways to start making positive changes in your money habits to create a lasting improvement in your financial health.
1. Track and Automate
Instead of trying to survive the month spending blindly, do some number crunching to know what you have to work with.
Do you know your net worth? If you don’t, now is a good time to find out. You can calculate your net worth by seeing how much you own versus how much you own.
If this number is in the red, it’s time to make a plan to pay off debt. This involves budgeting. Really, you should budget whether you are in debt or of high net worth.
Budgeting is essential to good financial health. Without it, you’d be hard-pressed to make any headway.
The first step is to do a complete breakdown of your money coming in and money going out each month. This can give you a lot of insight into your spending habits and where you can improve.
Included in your budget should be an allotment for savings. To make sure this happens, create an automated savings withdrawal from your checking.
You can also ensure that you don’t miss a bill payment by setting up automatic payments for these as well.
When you set up your savings and bills to be paid automatically you are making a dedicated money move that cuts out human error and overspending from the equation.
2. See Your Money for What It Is
It may seem ironic to be downplaying the importance of money in an article all about financial health but when you have an unhealthy attachment to money, you tend to use it more than you should.
You make money for a purpose, so make every dollar work for you. Make sure that your money doesn’t control you, you control it.
When you have thousands saved up as an emergency fund, don’t see it as thousands of dollars. Recognize that this money could possibly be the only reason you don’t lose your house if you lose your job.
When you think of your money for what it provides versus what you can do with it, you’ll be more strategic in how you use it.
Don’t fall into the lifestyle inflation trap. Live beneath your means so that you can build your way up to financial independence.
Decide what is the most important thing in your life and make sure you always have money for that. Is it family happiness? An early retirement?
Be willing to sacrifice some of your other less motivating needs to be able to provide for your highest priorities.
This way, even if you come into hard times, you will still feel accomplished because you know what’s important and are willing to make do without the rest.
It might be hard to make changes in the way we use our money, but just as improving your physical health can give you more energy to do what you love, better financial health can give you more freedom to do what you love.
Follow these three rules, stay informed, and you’ll feel more financially stable before you know it.