Looking to set some financial goals? Remember, it’s all about a change in behaviours and creating achievable financial habits to get you there.
Money doesn’t buy happiness but it can certainly help. And the key is building healthy financial habits. These are the daily, weekly monthly and yearly practises that you do without fail. After all, achieving goals and building wealth are both about consistency.
So have a look through some of my top financial habits below. These are thought starters to help begin the process of slowly building to a better financial you.
1. Create a financial plan
Set aside a morning (or even 45 minutes, if that’s all you’ve got) to create a realistic financial plan that sets out your goals and outlines the financial habits you will create in order to achieve them. Spend some time each week developing and reviewing that plan to stay on track. With every financial transaction you make, top of your mind should be “how does this fit in with my financial goals?”
2. The daily 10
Take 5-10 minutes to review your main bank and investment accounts online each day. Make certain that all charges and transactions are accurate and get a good overall picture of where your finances are at for that day. You can also use this time to skim the financial news to see if anything is happening that may impact your financial health.
3. The weekly 20
Every week, take a deeper dive into your accounts. Review all transactions and consider whether upcoming purchases are necessary. This financial habit is all about taking a bird’s eye view of your overall financial health and considering where you can tweak and change to reach your financial goals.
4. The monthly 60
Review all of your accounts monthly to make sure all bills are paid on time. If the funds aren’t there then call the institution to alert them of an expected payment date or work out a payment plan. This is also a good opportunity to take one utility or service each month and do a comparison search to ensure you are getting the best deal. Find more information on how to do that here.
5. The annual 24
Set a day aside each year to give your entire financial portfolio a thorough deep clean. You may like to set up a meeting with your financial planner on the day to work through everything under their expert guidance.
When creating an annual financial plan, be sure to create quarterly milestones that benchmark your progress. For example, if the plan is to pay off $10,000 from the mortgage in 12 months. then by month three, you should have $2,500 paid off. If that doesn’t happen, then readjust the plan, move the goal or play catch up. You can use your monthly 30 time to see how you are tracking with your annual financial plan.
6. Get on the same page
Discuss your financial plans for the coming year with your partner or spouse. Make sure you are both on board with goals and how you will address any setbacks. It’s worthwhile doing your entire annual 24 together, so you both know exactly what your expectations and goals are for the year.
7. Create a goal statement
Write down exactly what it is you are trying to achieve with your money, and by when you will achieve it. This financial habit helps you clarify your values and set your finances towards supporting them. It doesn’t have to be complicated. Write a simple statement and review it each month during your monthly 60 time.
My intention is to ________________ in order to achieve financial freedom.
8. Dream a little every day
Everyday, day dream about what it will be like when you reach your financial goals. Whether you are aiming to be debt free, have 6 – 12 months of emergency fund savings, or buy your first property, day about it, talk about it, write about it and make it happen.
9. Automate everything you can
Set your finances on autopilot by setting up every recurring expense using BPay or via direct debit. Arrange for your work to put a percentage of your salary directly into super. Automate dividends to be reinvested straight back in. Whatever you an automate, go ahead and do it. You can review all of these transactions during your weekly 20 time.
10. Save 10 per cent of income
Obviously save as much as you can, but make saving at least 10 per cent a financial habit that you religiously stick to. Follow the automate rule and get 10 per cent of your income paid directly into a separate investment account. You can set this up with your employer, or if that’s difficult, set up an automatic transfer from your salary bank account to your investment bank account every pay day.
11. Pay down debt
If you have any non-mortgage debt you should pay it down to less than 15 per cent of income at most. Obviously the goal is to eliminate it completely. Work out a plan to pay it down and then automate the payments. Review how you are tracking during your weekly 20 time.
12. Keep up with the financial news
Read, listen or watch the financial media to keep abreast of emerging financial issues that impact your life. Interest rate rises, political movements, a shift to business and tax rules will all impact you, even if you aren’t currently an investor or small business owner. Make reading the financial media part of your daily 10.
13. Curb overspending
Be mindful of emotional impulse spending. Shopping when you’re sad, mad or depressed often leads to purchases you’ll regret later. Buying more than you need directly impacts your financial goals. A dollar spent today is robs significantly more money from your future bank account.
Some good tips here: 3 simple tips to stop overspending
14. Find a like-minded community
Spend more time with those who are where you want to be financially. It helps you compare how you operate while helping you make changes along the way. There are plenty of good Facebook groups that bring together people who share the same financial goals.
15. Give back
This can be with your time or money. Spend time giving back to others less fortunate than yourself to maintain a balanced life with a good sense of priorities. If you’re particularly savvy, you’ll make sure that the charities you choose have ATO deductible gift recipient status. That way your donations become a legitimate tax deduction that can serve you well.
16. De-clutter your finances
What are some things that you’re paying for (magazine subscriptions, extra trips to the makeup counter, techie gadget impulse buys) that leech money you really need to hit your financial goals. Little things really do add up and one of the best financial habits you can get into is only spending your money on the things you truly need, love or value.
17. Don’t stress about the past
Leave financial regrets behind as they took place in order to teach you lessons for the future. You won’t ever be perfect, but commit to learning from mistakes to avoid making them again. This is one of the reasons why the daily 10 is such a good financial habit. Every day you are reminding yourself that you’re on track for the future, not stuck in the past.
18. Ditch the comparisons
Don’t compare your financial situation to others who are in a better position. Like you, they had to work to get where they are and if you take anything from their situation, it should be you can one day be financially free yourself.
19. Be honest
Hiding your financial faults from yourself does you no good whatsoever. Bring it all out in the open then make some hard decisions about your spending habits. The more insight you have into this area, the better decisions you’ll make. Be realistic about the goals you are setting for yourself and allow yourself some freedom money to spend on ‘silly things’. Sometimes that’s all it takes to keep yourself on track with the more important things.
20. Find ways to earn more money
Developing multiple streams of income is key to financial freedom. Things like extra shift, a new part time job or starting a home-based or online business could suit you. Becoming a switched-on investor with a proper investment income might also be an option for you.
Plenty of ideas here: How to turn your hobby into a side hustle
21. Sell your stuff
As part of your monthly 60, consider what you’ve done that month with the things you own. Sell anything you haven’t touched in 6-8 months and use the proceeds to pay down debt or plug them into savings. Make this one of your ongoing financial habits and not only will you declutter your home, you’ll be on track to declutter your finances as well.
22. Bring the kids along
Give children gifts that will last long past the next birthday by creating or adding money to an education fund at every birthday. If that’s not your thing, there are plenty of other ways to invest in your kids. The most important one is teaching them good financial habits from the start. You can find more on this here.