5 Tips to Form Good Financial Habits

Written while listening to my ‘Smoove’ playlist and attempting to clean my room. Obvi, I’m slacking on the cleaning just a tad.

Adulting is hard on the finances and there have been countless amounts of time where I look at my bank account like, “Where did the money go??” That ends today. Check out my five tips for forming good financial habits to survive and thrive in your adulthood.

1. Cut all unnecessary costs

Money is coming out of your account each month for all kinds of reasons, but are these funds going towards things you actually need. Take a moment to really think about where your money is going. Have a gym membership you don’t really use? Is Pandora One really worth that non-commercial life? Can you stand to shop at Walmart for your groceries instead of Whole Foods? Chances are your money is going towards things that don’t add that much value to your life. If you can live without it, ditch it and save a buck.

2. Save, save, SAVE!

Saving is the most rewarding concept in the world of finance. You’re literally paying yourself. If you keep that in mind, you won’t feel as crappy about putting hundreds of dollars away each paycheck; I promise! Saving is such a huge part of my life, that I even have three separate savings account for different purposes. You don’t have to go that far, but you should definitely start making efforts towards building up a substantial amount. Life comes at you fast, and it’s a lot better when you have the funds there to pull you through a difficult time and alleviate some stress.

Building up your savings can also be rewarding when it comes to other personal goals. For example, I love to travel and wanted to spend my birthday abroad. I chose to go to Toronto and decided to come up with a monthly savings plan to make that plan a reality. If you want to travel anywhere next year, start saving for it now! Figure out the price of everything you need for the trip, and break up the amount you save on a month-to-month basis. By the time you get around to booking and making flight arrangements, money will be no object.

3. Have a backup cash stash

This sounds old school, but it is so very convenient! 10 bucks says your mom probably has a stash of cash hidden somewhere in the house (hopefully not as obvious as the mattress). I’ve noticed that I, too, have picked up this habit recently and it has come in handy. Find a discrete area or object to hide your cash in and contribute to it every once in a while when you have no use for leftover cash. Hiding place ideas:

  • In a picture frame
  • In a box on a shelf that no one ever checks
  • Hidden area of your jewelry box
  • In an envelope taped under your bed

4. Write out your budget and stick to it

I don’t know about you all, but I love writing things down. Writing makes it seem more concrete and real to me, but I encourage you to do what works best for you. Journals/planners, Excel sheets, and the note app on your laptop or cellphone are all great ways to jot down budget items. I’m also a huge fan of the EveryDollar app and website. Here’s a system for budgeting effectively:

  1. Write down the amount you make in a month
  2. Write down different areas in which you spend money
    1. Tithing
    2. Food
    3. Gas
    4. Phone bill
    5. Emergency Fund
    6. Travel
    7. Rent
    8. Clothes
    9. Toiletries
  3. Allocate money according to how you typically spend it
  4. Stick to it!

The key to any budget is the last step that I put in there: sticking to it. A budget is only as effective as you are with your money.

5. Be disciplined with your money

Discipline is so important when it comes to money and crucial in maintaining a budget. Don’t spend your food money on travel funds or you’ll regret it! Money can go just as fast as it comes so it’s important to allocate and use it wisely. This doesn’t mean you can’t spend your money on fun things. We work hard for the income we get, it’s fine to enjoy that every once in a while! It’s all about making it a point to allocate money towards those fun activities.

One thing that helps me stay disciplined with money is using a cash budgeting system. Each paycheck, I write down what money I want to go where and withdraw cash for certain categories. This cash goes into separate marked envelopes. For example, if I have a budget of $140 for food for one paycheck, I’ll withdraw $140 and put it in the envelope marked “Food.” The key to success with cash budgeting is sticking to only what’s in the envelopes for that category. In other words, don’t reach in your gas budget to cover eating out expenses.

If you struggle with finances, try applying these five habits and watch your lifestyle make a positive turnaround. What finance-savvy tips do you have to share? Comment below!

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