A few daily money habits add up to big results
When you’ve never been intentional with your money, and then one day you say I’ve had enough! and you decide to get serious, it can be tough to change old habits.
You might think Oh, I’ll figure out a budget and stop spending so much – but it ain’t so easy. Your brain has been building tracks for decades that are now wide and smooth.
That means your thoughts are traveling on a neuron super highway, and trying to get them to slow down and take a new direction is challenging.
If you start by trying to build habits that are too ambitious, you might be setting yourself up for disappointment.
Starting with small, consistent changes can be like moving the rudder of a ship. Even the slightest degree in movement will lead you to a completely different destination.
So don’t discount those minor adjustments you can make, because they can add up to major wins.
Here are 5 daily money habits you can develop that, when practiced consistently, will set your ship sailing in a better direction.
1. Track Your Spending Every Day
This might sound like a total time-sucking chore, but it’s probably the most important item on this list.
You *must* know where your money is going – especially when you’re trying your darndest to get out of debt and add more to savings.
But I assure you, once you set up your system, it can take as little as 5 minutes a day.
If you don’t have a system, here are some suggestions:
- On every receipt you get throughout the day, write down the budget category it will be applied to. When you update your budget at the end of the day, just add those amounts to the categories you wrote down.
- Keep a running register (either on paper or on your phone) that includes the amount, place of purchase, and category. Update your spreadsheet or tracking system at the end of the day.
- Use a budget app that connects to your bank account. Log into the app and review your expenses daily to make sure categories are correct and within budget.
Tracking your spending every day will help you stay within the spending limits you’ve set for yourself. Living within your means is one of the most important financial habits you can practice in life.
With a system in place, you’ll catch budget overages quickly so you can make adjustments before you totally get off track and give up.
2. Save A Little
Yes, saving can be a small daily habit that adds up to big change.
In fact, you might be motivated by knowing how much your money will grow if you just add to your savings a little bit every day.
In David Bach’s book, The Latte Factor, he tells a fictional story to explain financial truths.
The main character is a young career woman who believes she doesn’t make enough money to buy the things she wants or save for retirement. She meets a business owner who shows her that she is already rich, she just doesn’t realize it.
The “latte factor”, as described in the book, is a concept that explains how small expenses can cost you more than you think.
One example the story illustrates is saving $10 day. Instead of spending that ten bucks on a latte and blueberry muffin, you can put that money into a tax-favored account that earns 10%.
Can you guess what you’d have after 15 years?
If you’re like me, you’d do a quick mental calculation of $10 x 365 days x 20 years, which is $73,000. So, I would guess maybe $5K more than that with the interest.
The actual amount? $124,341.
That’s right – $46,341 MORE than my guess. Just from ten bucks a day.
This sounds crazy amazing, right? Ten dollars seems so little – but it is *still* $300 a month.
And, if you’ve cut every corner you can find, you may not have that to spare right now.
But what about $2 a day? Or even 50 cents?
When you build new habits, start small.
Here are a few ways to do that:
- Sign up with your bank’s automatic saving program. Some banks will round up your purchases to the next dollar and then transfer that amount to your savings account. My bank transfers $1 every time I use my debit card.
- Use an app like Dobot, which connects to your checking account and transfers small amounts to your Dobot savings account every few days.
- Use your company’s 401(k). There is no minimum you have to contribute. Want to put in $2 a day? Set up a $14 automatic withdrawal from your weekly paycheck.
- Go old school. At the end of the day, put all the money that’s in your wallet (yes, even the pennies!) in a jar. Deposit your savings into an interest-bearing account once a month. *This only works if you’re disciplined enough to follow through!
The goal right now is to start developing the habit of saving.
The best way to do this is by setting up a saving system that will transfer money to your savings account automatically. You’ll never miss it, and your savings will grow!
3. Shop Without Credit Cards
We all know that paying down debt is one of the most important long-term financial habits you can practice.
So, to build on that habit daily, minimize your use of credit cards to you don’t continue to add to your balances.
If you leave your credit cards at home, you’ll decrease the opportunities to increase your debt. And you’ll cut down on impulse buys that you inevitably regret later.
*However* … this doesn’t work so great if you’re an avid online shopper like myself.
So, what to do? I think it depends on how much you trust yourself.
If you’re disciplined and determined, maybe taking your cards out of your purse and leaving them in a drawer is enough. Just the act of creating space between you and them might work.
Or, you could put them in an envelope. And then seal it.
You might need to take it a step farther and hand those babies over to someone who will not give them back to you unless your head is on fire.
And, of course, you could always just cut them up (*gasp*).
None of these ideas will work unless you make a pact with yourself and stick to it.
But if you can develop this daily habit of not using your credit cards, your debt pile will only get smaller.
4. Take A Money Minute
As mentioned above, daily money habits should include tracking your spending with a system that works for you.
That usually looks like adding up all the expenses you had for the day, then adding those to your tracking system before you go to bed.
A daily habit that pairs well with tracking is taking a minute or two in the morning to check your account balances and financial progress.
Then, take another minute to review your short and long-term goals.
Remind yourself what you’re making sacrifices for. Put your dream retirement “lenses” on, so every financial decision is made through this vision.
Doing this first thing in your day will set your focus and give you direction.
You’ll be mindful of what you need to do to stay on course so your spending doesn’t steal from your savings.
If you’re rushed most mornings, set your alarm for 5 minutes earlier. Schedule the habit.
Staying connected to what your money is doing, and how that affects your goals, will help you be more intentional with your financial decisions on a daily basis.
5. Educate Yourself
If you only take 5 minutes a day to learn something about money management, that’s still about 5 books a year.
Bump that up to 15 minutes a day, and – you guessed it – that’s about 15 books a year.
Everyone has time to read when they make it a priority. So there’s no excuse for ignorance.
Does investing sound complicated?
Are you confused about Medicare or Social Security?
Do you give up on budgeting because you just can’t figure it out?
Everything you want to know about money management and retirement planning is out there to learn – for free.
I know it can be overwhelming just thinking about all the pieces. And it’s easy to talk yourself into believing that just because you’re not a professional financial guru, you don’t have the smarts to figure it all out.
Let me tell you now: you do have the smarts.
It’s not too complicated to learn, you just may be too intimidated to try.
Learning *about* smart money habits just takes some practice.
So, write down some topics you want to be more knowledgeable about. Investing, insurance, estate planning, budgeting, etc.
Pick one. Then start learning about it.
- Check out book from the library
- Sign up for a local class
- Find some personal finance blogs
- Listen to budgeting podcasts
- Watch YouTube videos
- Go through one of these 21 free online classes
There is so much content out there to learn from!
So take the initiative to be informed and educated. Take time every day to learn a little more about how to be a wise money manager.
Changing direction can be difficult. That’s why most people have forgotten their New Year’s resolutions by March.
It’s rarely enough to have productive ideas or make promises to do better. As humans, we’re creatures of habit. And habits take time to make – and break. They take effort, focus, and time.
So be intentional about creating good habits.
Take the following steps to build the 5 daily money habits in this post:
- Write down the new habits you want to form, in detail
- Schedule the daily task that will help you form this habit
- Make these tasks – no matter how small – a priority in your day
- Use a habit tracker so you have a visual of your progress
- Ask someone to hold you accountable
Small, daily habits can add up to big changes in your life.
Remember – you’re the captain of your own ship. Moving the rudder even a little can make all the difference.
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