About changing money habits!
By adopting habits that promote healthy financial behaviour, your situation will naturally improve over time.
Why habits matter
Habits are small actions that we repeat – the things we perform daily without even thinking about it.
They are powerful tools that shape our lives, influencing everything from our health, to how we use our time, how we interact with others, and how we manage our money.
Good habits help us achieve our goals and are key to financial success – and unfortunately, the bad habits hold us back.
Habits like saving, avoiding impulse purchases, and spending in line with our goals help us to take control of our finances.
When we make these habits a part of our daily routine – something we do without even thinking about it – we’re creating a solid financial foundation. And once you've formed the habit, it's much easier to maintain.
The power of saving
Saving is an essential money habit – setting aside a portion of our income for the future. It provides a cushion for unexpected expenses and helps us achieve our financial goals.
But let’s be honest, saving can be a challenging habit to develop, especially if you're living paycheck to paycheck.
Let’s look at a few strategies you can use to make saving a habit:
One of the most effective strategies is to automate saving by setting up an automatic transfer every pay, from your everyday account to your savings account. With this approach (also called ‘pay yourself first’) you don't have to think about it, and the money is saved before you have a chance to spend it.
If your income is limited, consider taking on an extra shift at work, or a side hustle – and direct that extra income straight to your savings.
Review your expenses and identify any leakage – the money you ‘find’ can be directed straight into your savings account.
Even starting with a small amount is better than nothing and importantly, it develops the habit of saving.
The importance of cashflow planning
When you create (and maintain) a cashflow plan, you have a tool that paints a clear picture of where your money is going, allowing you to make informed decisions about how you use it.
While maintaining a cashflow plan can be challenging at first, like any habit, it becomes easier with practice.
By having a tool that clearly sets out your financial position, you’re building confidence in any financial decision you make, and you’re on the path to achieving your financial goals.
Avoiding impulse purchases
Impulse purchases are the things you buy on a whim, without thinking about whether you really need them or can afford them. We've all been there – seeing something we want and buying it without thinking it through.
But it can quickly add up, leading to overspending, taking on debt and derailing your financial goals.
Instead, make it a habit to take time to consider the purchase:
Set yourself a rule that you won’t buy an unplanned purchase of more than say $50 without waiting a week and checking your cashflow plan.
Ask yourself if you really need the item and if it aligns with your financial goals to avoid buyer’s remorse.
For big ticket items, commit to doing some research before making a decision.
Avoiding impulse purchases is an important money habit, centered around taking the time to consider a bigger purchase – avoiding buyer's remorse and unnecessary financial stress.
Want to be better with money?
Start by look at ways to improve your money habits. The key to improving your financial habits is to start small and be consistent.
Don’t try to overhaul your entire financial life overnight. Instead, focus on just one thing, and build on your success.
With focused effort, you'll find that managing your money becomes second nature – and working with a money coach can get you there quicker.
To find out how a money coach can help you, contact Victoria Wallis-Smith.