The key to being financially stable is having good money habits. No matter how ambitious your money goals are, you need to approach it by building a sustainable collection of smaller habits that will help you reach your goals.
We should add that just as there are good money habits, there are bad money habits as well. While the former will take you closer to financial stability, the latter will leave you constantly struggling with your finances. Below are good money habits you need to form today to improve your financial situation.
Purchases Should be Planned
Avoid buying things impulsively or spending money on items you don’t genuinely need. Rather than going to the store to buy things based on what appeals to you at the moment, consider drawing up a list of what you want to buy and how much you intend to spend on them.
This isn’t limited to physical shopping alone. The same rule applies to online shopping. Before you make payment for anything online, take a day or two to ask yourself if this is an essential item or something you can actually postpone to a later time.
Save Before You Spend & Not the Other Way Around
It should never come as a surprise that there are several things competing for your salary every month. What this means is that there is a strong tendency that you could find yourself struggling to save money. This is precisely why you should prioritise saving a part of your monthly income.
The danger of postponing saving till a later time is that there might be nothing left to save by the time you are ready to save. Like Jack Benny, the American entertainer once said, “Try to save something while your salary is small; it’s impossible to save after you begin to earn more.”
Automate Your Savings
We already talked about saving a portion of your salary before you begin allocating money to your other needs but that’s not enough. The next step is to automate your savings such that once your bank account gets credited, your monthly savings gets deducted from it. This saves you the stress of manually transferring money from one bank account to wherever it is that you have chosen to save your money.
For instance, if you’re trying to save a quarter of a million by the end of the year, it will be easier for you if you automatically transfer a minimum of NGN20,000 a month into your savings account. A wise person once said that “the best thing money can buy is financial freedom” and of course, we agree.
Save Money by Going Lean & Finding Substitutes
Everything that you spend your money on fall into two broad categories – the things that are very important and the things that are not as important as things in the first category.
For instance, you need to have food at home. You need to have electricity and water. You need to pay your housekeeper. These are very important but when it comes to some other things, you’ll find that there are options. For example, rather than spend NGN12,000 subscribing to a digital satellite TV service to watch movies, you can subscribe to a subscription-based streaming service that offers you similar satisfaction at NGN4,400.
There are several other examples. Instead of spending NGN20,000 on your monthly subscription at the gym, you can get yourself running shoes for NGN10,000 and set weekly targets for yourself using free workout apps on your mobile device.
Track Your Financial Progress
It’s important to set aside some time each month to track how much progress you have made with your financial goals. For instance, if you have taken a personal loan, are you meeting up with your monthly repayments?
If you have been putting money aside each month for a professional course to help you advance your career, is that going as planned or is there something getting in the way of achieving that goal?
Regardless of what your financial goals are, it’s important to pause to assess how things are playing out financially. There are times when things might not be going as planned and simply require a little tweak in your plans as opposed to abandoning them altogether.
Final Thoughts on Good Money Habits
Remember that even the best-laid plans sometimes go wrong but you need to find a realistic way to turn the tide in your favour.
At the end of the day, you will realise that good money habits go beyond just saving money. It’s a more wholesome goal that moves you towards financial stability.
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Are there additional good money habits that you have personally tried and worked for you? Please feel free to let us know.