A little while ago I shared a secret. If you really want to be in charge of your money – it starts with motivation. That’s a crucial first step in having tip-top finances including financial freedom. But motivation alone can wane off quicker than your patience for that couponer ahead of you in line. If you got motivated but quickly lost your momentum, what you need are better money habits.
So today, we’ll talk about the money habits you need to reach all your financial goals. And they fall under the categories of:
- Pay attention to your money
- Save more
- Earn more
- Invest more
But first let’s get you re-motivated!
Springboard actions to take right now
If you really want to generate momentum, start with these:
Set up a separate account with a fun name (like “dream account”) This is where you’re saving up for something that’s just for you. Be it a trip, an emergency fund, a downpayment, or investing money for early retirement.
Create a contract or a challenge to save up a concrete amount of money in your dream account (it has to be big enough to wow you, but still feel achievable) and challenge yourself to take time every week for at least one habit in each category below.
Ideally do this challenge or contract with another person (or even your significant other) but you can just keep it to yourself too.
Make a date with your finances. A lot of people avoid looking at their bank and credit card statements. Maybe they just don’t want to see it. Maybe they think they already know what’s going on. But I want you to dedicate an hour or so to really pour through your finances.
This will give you an idea of where you are and where you want to go. You can’t clean a house if you don’t know it’s dirty.
Don’t make a bunch of “improvements” at once. I know when I try to improve something in my life I get sucked into a vortex of improving EVERYTHING. Like, if you commit to stop eating out you might also try to commit to only eat vegan and to prep your food on weekends and go to sleep early every night.
Those are noble and all, but it’s too many commitments. You’re bound to slip up and then give up on everything. For now, just focus on having better money habits. Everything else will follow.
In an ideal world…
In an ideal world, you’d automatically move a chunk of your paycheck to your savings or investing account and watch that money grow! I mean, that’s literally what every single finance book suggests, so it’s probably for good reason.
Automation is everything in my eyes as well. However, I know we don’t all live in an ideal world. Many of us have unpredictable income or sporadic expenses that make it harder to automate. So…
Otherwise… make a habit to check in with your money
There’s nothing more motivating than setting the intention to save for something and watching your bank account grow. So make it a habit to check in regularly.
I really like Personal Capital for this – it hooks up all your financial accounts, gives you a breakdown of your spending by category, and gives you a few more options in terms of automation. I also like it cause it’s so pretty. (Personal Capital is free, by the way. Here’s my review of it if FREE isn’t enough of a selling feature.)
You could also just get an app for each of your bank or financial accounts to make sure you’re on top of things and to stay motivated to save. And speaking of saving…
Better Saving Habits
The most important money habit you can develop is SAVING MONEY. What’s the point of having a dream account if it’s empty? What’s the point of earning more if you don’t use that money for what actually matters to you?
So now that you’ve made a dream account, here are better money habits to make sure it fills up.
1. Make “Do I need it?” your new mantra
Before any purchase you make, take a moment to ask yourself if you really need this. How does it stack up against your dream? Will you just forget about this purchase in a few days? Is there an alternative to buying it at full price?
You can save SO MUCH MONEY by just avoiding spending you already know is unnecessary.
If you really do need to make a purchase, make it a habit to check for cheaper alternatives like buying it used on Craigslist or using some sort of rewards points you might already have.
2. Uninstall Uber Eats
Whether or not you’re in the habit of ordering in, there’s no denying that takeout is a regular part of most people’s lifestyle. This is made only worse by the multitudes of apps designed to make your impulse decision a pricey reality.
And the thing is, each meal doesn’t seem like it costs that much, so what’s the big deal? Well. It adds up! If takeout is part of your lifestyle, take a look at your bank statement, and see how much you actually spend in a month.
Wouldn’t you rather see that money in your dream account?
For each week you don’t order in or go out, move that equivalent amount to your dream account. If you need more instant gratification, move that money every day that you don’t eat out!
3. Look for cheaper living options
I’m not talking about making a drastic change to save a few bucks, but make it a habit to keep your eyes open so you can jump on a good deal as soon as it comes around.
If you’re a renter, always keep an eye out for cheaper options.
If you own your home and pay a mortgage, get familiar with refinancing options and keep your credit in tiptop shape.
Also, keep an eye out for duplexes so you can rent out a chunk of your home and even occasionally check prices and work opportunities in other cities if you’re willing to move.
4. Save unexpected money
If you ever get “bonus” or unexpected money – move it to your dream account right away!
What’s unexpected money? Something like a tax return, a bonus from work, or an impromptu sale. Basically, if it’s not from your paycheck – it’s bonus money for your dream.
Better Earning Habits
You may think that getting a better-paying job is easier said than done, but if you develop habits that keep you “ready” and open for opportunities, you’ll start seeing ways to earn more money like never before.
5. Update your resume regularly
Is your resume gathering dust somewhere? No wonder your income has stagnated! Start checking in your resume and not only will you be ready when the right opportunity presents itself, you’ll be better able to understand and articulate your own value.
6. Get active on Linkedin
Linkedin is still the easiest professional networking tool, and you have nothing to lose by getting active. A bit of a warning though – intention matters! Don’t let Linkedin suck you into a vortex of news and social media. Use it to become aware of better opportunities and to be more visible to people who could help you.
A good place to start is updating your profile, start adding new people to your network, and comment on people’s posts with thought.
7. Make accounts on job boards
There’s nothing worse than coming across an awesome job, being eager to apply, and then having to spend an annoying amount of time making an account and verifying it. If you make an account on the popular job boards now, you’ll be ready to pounce when a good position pops up. Plus, you’ll be more likely to browse for jobs.
8. Start browsing college and training programs
This one goes hand-in-hand with the habits above. Always be on the lookout to upgrade your skills. Investing in yourself is the most lucrative investment you can make. Maybe you’re not sure what you want to upgrade to, but by being familiar with different diplomas, degrees, and training programs you might find that unicorn position that’s just right for you.
If you do decide to take the leap to more training – always ask if there are any scholarships, bursaries, or grants you can apply to (maybe even through your current employer.) Having someone else pay for you to upgrade your skills is the equivalent of earning rent with mortgage magic!
9. Also, try selling your stuff.
Selling stuff is always part of my “earn money fast” advice, and I get the most pushback on this. Mostly, I think people see it as a pain in the butt. Well here’s a way to dip a toe into the idea.
Just post a few of your things on Craigslist even if you’re not sure you want to sell them. You don’t have to go through with it if you don’t want to, but just testing the waters will give you an idea of what people are looking for, how much you could get for it, and most importantly – how easy it is to do it.
Better Investing Habits
If you’re still not an investor, you’re probably holding on to some lame excuse along the lines of “I’ll get around to it” and your excuse is probably rooted around the belief that investing is complicated. So here’s a better money habit for you:
10. Set aside time to invest and learn
Investing is better when you can get your hands dirty. Use your regular investing time to:
- Open a trading account. My top pick is M1Finance because of its low fees and automation, and they give you $30 bonus investing money 🙂
- Read about lower-stake investing that still has huge payouts and see which method applies to you.
- Get comfortable with real estate. Open a free Roofstock account or become a regular on MLS to start keeping tabs on what it takes to invest in rentals.
TL;DR – Better Money Habits
Motivation is step one towards financial freedom But motivation is not enough. Build better money habits around:
- Checking in with your finances regularly
- Saving more
- Earning more
- Investing more
So, which of these habits are you willing to start today? Leave me a comment!