Learn how to build good financial habits - that stick!
To be in a good financial position, you need to practise good financial behaviours. Managing money and building wealth is dependent on the actions you take and, in the long term, a pattern of acting with financial effectiveness.
The challenge is forming strong financial habits. Below we show you how.
At the root of habitual good practice, there are certain principles that act as foundations for what we are trying to build. While they seem straightforward, they’re certainly easier to pledge than to put in place.
Firstly, we have to spend less than we earn. It may sound simple but many are struggling to achieve this, with a multitude of reasons why.
However hard it is, it has to be the objective - and eventually realised - in order to influence the success of other habits.
Once we are spending less than we are earning, we have the capacity to save money for a rainy day. To have a safety net to cover an unexpected expense is vital and plays an important role in contributing to our future selves.
Beyond this, extra safeguards can be put in place to preserve financial health, including income protection.
Good habits lead to good living
With foundations established, your habits can be scaled up and added to. Maintaining a personal budget, contributing to your savings and carrying out monthly reviews is the groundwork of super finances!
When it comes to money management, knowledge is power and the funds at your disposal should never be a surprise.
The building blocks
We reap what we sow and, as new habits fuel financial health, reward giving acts as a taste of the success to come.
Association can be crucially beneficial to habit forming. When a new habit has been successfully formed, for example, and you've saved what you planned, a movie night on the sofa could be your reward.
Habit stacking is a useful concept too. If time is spent listening to music, for example, combining that with checking a budget will see benefits follow. If a task is unappealing, a spoonful of sugar helps the medicine go down.
As the saying goes, there’s a time and place for everything, and the physical location and window that you build your new habit in is crucial. Those all-important monthly budget reviews can get done far more easily if they take place at the same time, on the same day of each month, using the same desk in the same room. You get the picture!
The repetition of good habits will help the repetition of good habits. If an app step count has to be hit to help keep your health insurance premiums down, or even to secure a free coffee, putting out gym clothes each night, ready for the morning, will give a little shove in the right direction. An environment should always nurture positivity.
Raising a new you
New habits are the route to a new you. They may take time to form - after all, none of us managed to walk the first time we tried to put our legs to use - but the result will be a shift in focus and, in due course, better financial health.
The changes may be gradual but we’re all growing and we’re all building. Form those habits that will lead to success, believing that you are a new person and a new person will emerge. Embody that character through establishing new norms and a healthy financial future can be yours.