Five steps to creating good money habits now

Over the past year I have received and collected hundreds of questions about money from women. One of them asked frequently is: What are good money habits I should be using?

Here are some thoughts on it...

We’ve all heard the savings advice to cut out our morning coffee. It’s the frustrating, and pretty condescending, start to any financial wellness story. But let’s be honest with ourselves. Grabbing a coffee on your way to the office isn’t what’s going to make or break the bank. Healthy money habits go well beyond our caffeine addictions to rethinking our attitudes toward savings, considering investments and even talking with our friends about money. And if you’re anything like us, a morning coffee is probably necessary to jumpstart a conversation. 

We all approach money in different ways, depending on our age, income and background. While the amount of money we’re talking about may differ from person to person, the basis of healthy money habits should be the same. Here are our top five tips for being money-smart.

1.     Track your expenses. 

Technology has made tracking our expenses incredibly easy. You don’t need a spreadsheet and calculator to breakdown your monthly spending. Look for an app that works well for you. We like Mint, a free budgeting app that will sync your accounts, including your credit cards, to present your incoming and outgoing money in easy to read charts. If you don’t have a smartphone, Mint also has an online version that allows you to review your spending at home or in the office. If you’re married or living with a partner, look at apps like Goodbudget or EveryDollar to considered shared expenses. 

Once you set up an account, dedicate yourself to checking it. Maybe start monthly, when you’re sitting down to pay bills anyway. Or set up alerts through your new app to let you know if your spending is looking a bit high. Whatever you do, just don’t set it and forget it!

2. Make a monthly budget.

Tracking your expenses will allow you to make a realistic budget for yourself. Things like rent, transportation or your internet bill will be easier to allocate for because the amount is probably not going to change very much each month. But what about your budget for eating out? Or drinks with friends? 

Making a monthly budget isn’t about punishing yourself and saying you can only eat at a restaurant once a month. Be realistic. What kind of spending on food or socialising makes sense for you, allowing you to have a happy life without blowing through your paycheck? Let yourself have a cocktail (or coffee!) without feeling guilty. 

It may help to think about your budget backwards. Start by designating how much you want to save each month. Savings should include both saving for special goals and treats for yourself, like a wedding dress or a holiday, as well as savings that you’re setting aside for emergencies and retirement. Once you determine how much of your income is untouchable and how much goes to regular bills, it will be easier to think about how you want to spend the rest.

3. Save. and then invest!

You’ve thought about your savings budget, so now you have to put it to work. Set up automatic withdrawals for your accounts, putting direct debits into a savings account instead of a checking account. Or make it part of your monthly “bill” paying. When you sit down to pay your credit cards and rent, transfer a set amount of money into your savings account. It will feel pretty good to be putting that money aside!

This goes for investments as well. How much of your monthly salary is going into your retirement accounts or investments? Consider doing direct transfers where possible. Again, make this part of your monthly money routine.

4. Talk with your friends. 

Friends are your greatest support systems, so why not talk with them about your money habits? Maybe it means finding free or more affordable ways to hang out, if you feel like you tend to hit up the same pricey cocktail bars. Or maybe it’s sharing discounts and shopping at thrift stores together. Whatever you chose, it’s easier to do it with friends. 

Friends are also excellent sources of financial advice. Ask your friends how they invest their money. Do they have a budgeting app that they use? How do they decide what bills to split with their live-in partner? You may be surprised with the insights they can share!

5. Do it now. 

Just like going to the gym, it’s never too late to make healthy money practices. At any stage of life money can be saved or spent. If you have a load of credit card debt from a big move you made a year ago, make payments part of your budget now. Eliminating debt is a great way to get yourself on more comfortable financial footing.

Don’t let your past spending decisions hold you back or make you feel like you can’t get ahead financially. You can and you will!

You’ve made the right first step for developing good money habits by even reading this post and considering changes to make. Let us help you move your goals forward.

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