15 Money Habits You Should Be Practicing if You Want to Achieve Financial Freedom
Achieving Financial Security is Just A Few Steps Away | By: Randall E. White, CFP®, RICP®, CRPC®, CMFC®
What is stopping you from achieving financial freedom? Often in life, the biggest hurdle we have to overcome is ourselves. Too often our mindset or our emotions get in the way of us achieving the goals that we’ve set. This is especially true in our financial lives. Whether it’s the feeling of being too overwhelmed by the task set before you, such as saving for a house or retirement, or it’s unhealthy habits you’ve picked up like late night shopping, it’s easy to feel ill-equipped, disparaged, or completely overwhelmed when it comes to tackling your money.
However, money doesn’t have to be this gargantuan, all-consuming burden in your life. It’s possible to overcome these hurdles and take control of your financial reality, and it starts with learning a few healthy money habits. We’ve put together a list of 15 of our favorite money tips that can turn you into a financial guru in no time. We hope you to try implementing some of these into your own life, then watch as your financial independence blossoms.
- Set a Budget: The first step to managing money like a pro is to set a budget. This is the most crucial step in your journey towards financial security. Take some time, write out all of your income and expenses for the month, and create a realistic budget for yourself. Remember, the key to a budget is to follow it!
- Go Green: Curb overspending by going “all cash.” Withdraw a certain amount each month to cover the items you budget for and don’t purchase anything you can’t pay for with your allotted amount.
- Set Aside a Fun Fund: When creating your budget, allocate about 30% for lifestyle spending, i.e., movies, restaurants, trips with your friends, and happy hours. It’s unrealistic to cut yourself off from any fun, but by limiting yourself to a specific percentage, you allow for yourself to save and feel like you’re splurging simultaneously. This makes it more likely that you’ll stick to your budget!
- Plan One Step at A Time: Studies show that the loftier and farther away a goal seems, the less sure we are about how to achieve it, and the more likely we are to give up. So set smaller, short-term goals that can help you get there. For example, don’t just say you want to save up for buying a home. Instead, get specific. Decide that you want to save a specific amount each month or that you want to cut out buying coffee every morning and start making it at home in order to save.
These are smaller goals that are easier to manage and achieve, but they will ultimately bring you closer to your larger goals. Plus, setting goals and achieving them will instill more confidence in yourself and your skillset for when it comes time to tackle your larger goals.
Get Money Motivated
- Get Specific: Set financial goals for yourself and get specific about them. Start out by writing down what you want to accomplish, then give that goal numbers and dates – how much debt do you want to pay off and when? How much money do you want to be saved and by what date? Having an exact amount along with a deadline, not only holds you more accountable but gives you a better picture of the steps you need to take to get there, which makes achieving your goals more likely.
- Adopt a Spending Mantra: Implementing a catchphrase of sorts when you’re out shopping or spending money can help you stay accountable to your goals in the moment. Ask yourself, “Is this [fill in purchase here] better than a trip to Europe next year?” or repeat, “Credit charges are only for purchases that are $40 or more.” This type of pause is often enough to curb impulse spending all on its own.
- Practice Self-Care: Ultimately at the end of the day, taking control of your finances is a form of self-love. By doing so, you’re telling yourself that you value who you are, the hard work you do to earn your money, and the dreams that you have.
See Also: Habits of Champions
Amp Up Your Earning Potential
- Negotiate Smarter not Harder: When talking to a potential employer, there are ways to discuss your salary that can lead to a higher paycheck. For instance, get the company to name figures first. If you tell them your current pay right away, you have no way of knowing if you’re lowballing or highballing yourself. Let them name a figure first and then you can negotiate from there.
Also, make sure to do some research on the salary range for the position you’re applying for in your area. Know before you go into the interview what a typical salary might look like for the job you want so that you can negotiate from a more informed position than just taking the company’s word for it.
- Negotiations Can Be for More Than Your Salary: There are other things that you can negotiate that will ultimately help put you in a better position than just your salary. You can negotiate your work hours, your official title, maternity or paternity leave, vacation time, and what projects or tasks you’ll be directly responsible for.
Keep Debt at Bay
- Start Small: When it comes to tackling a mountain of debt, paying off your smaller debts can give you the confidence to tackle the larger ones. Typically, it is recommended that you start with the account or card that has the largest interest rate. However, sometimes psyching yourself up is worth it and watching those small debts drop to zero can give you the push you need.
- Don’t Cosign a Loan: Financial management is all about recognizing boundaries, and one that you should set is to never cosign a loan for anyone. Should the borrower miss a payment, your credit score takes a hit. Plus, if it gets serious, the lender could start coming after you which can make your life more stressful and derail your personal goals. Also, there’s a high chance it will ruin your relationship with that person.
- Start Saving ASAP: The best way to save for retirement is to start. Not next week, not once you get a raise, but today. The longer the time you spend saving, the more prepared you’ll be for retirement.
- If You Get a Raise, Match It: Every time you get a bump in your pay, avoid lifestyle creep by upping your automatic transfer to savings and increasing your retirement contributions.
- Keep Your Savings and Checking Separate: If you see money in your checking account, you’ll spend it. Period. So, try keeping your checking and savings accounts separate. Even better, have your accounts at separate banks so that it’s not so easy to transfer money from your savings to your checking.
Know When to Invest
- You Can Have too Much in Savings: If you find that you have more than six months’ savings in your emergency account and have enough socked away for your short-term financial goals, then it’s time to start thinking about investing. Find a financial planner that you trust and begin building an investment portfolio that works for your specific goals and dreams.
Final Thoughts on Adopting Positive Money Habits
At the end of the day, the only thing stopping you from achieving financial freedom and accomplishing your goals is yourself. These tried and true tips can help you master your finances, no matter what stage in your financial journey you are in.
If you feel like you would benefit from talking with a financial professional about how to change your money habits, please contact us today. We take pride in using our expertise to guide our clients to achieve their financial and life goals.
Securities offered through Triad Advisors, LLC, member FINRA/SPIC. Advisory services offered through TriCapital Wealth Management, Inc. TriCapital Wealth Management, Inc. is not affiliated with Triad Advisors, LLC.