Top 10 Better Money Habits You Can Build This Year

Top 10 Better Money Habits You Can Build This Year

The start of the year is a great time to review and revamp our financial plans, including common resolutions like "save more money" or "pay down debt". Here are some ways to develop better money habits for 2015.

True savings happen when we deviate from our habits. You might already be doing many (or all!) of the items below, but for the rest of us, it's a reminder good money habits are all about small actions and important changes in mindset.

10. Keep Your Budget Simple

Top 10 Better Money Habits You Can Build This Year

If you're into personal finance, it's easy to geek out on all the apps, graphs, and financial tools available, and it's also easy for our finances to get too complicated with lots of budget categories and subcategories. Take a more minimalist approach and sticking to a budget might be much easier. Remember, you don't have to track every single cent to maintain good money habits.

9. Establish Passive Spending Barriers To Save More Money

A few "rules" you create for yourself — such as using a 30-day list for your wants, paring down your stuff with the "two items out for every item in" rule, and emphasising experiences over possessions — can help keep more money in your bank account. You can also use indecision (when you can't decide between buying two things) as a trigger to not buy anything. Once you follow your rules a few times, these might turn into a wealth-building habit.

8. Cook At Home More Often

Top 10 Better Money Habits You Can Build This Year

Cooking at home not only saves you money, it's also healthier for you. Plan your meals each week, upgrade your packed lunch, and enjoy delicious meals at home without spending a lot. Or mix money matters and meals: Organise a workplace money lunch, which is part financial support club and part lunch club.

7. Maximise Your Superannuation

Top 10 Better Money Habits You Can Build This Year

If you have spare money that you can invest in superannuation, this will pay off when you retire. That's especially important once you've paid off a mortgage and eliminated others debts.

6. Put Your Money On Automatic

Top 10 Better Money Habits You Can Build This Year

This isn't really a habit, but once you set up your automatic payments and savings, you've got time and energy to focus on the other money habits. Using automatic bill payment and savings plans, most of your finances can be taken care of like clockwork. Just remember to check in regularly to make sure everything's going as planned. Diagram your financial network to see how all of your financial services are linked together.

5. Give Up The Frugal Habits That Aren't Worth It

Top 10 Better Money Habits You Can Build This Year

Just as important as establishing better habits is ditching the bad ones. Some frugal tactics aren't actually worthwhile, like driving for kilometres to save a few cents on petrol. To <a href="http://www.lifehacker.com.au/2014/11/money-saving-habits-that-can-backfire-and-wreck-your-finances/figure out if a frugal habit is really worth your time and energy, start with your hourly income and calculate the "time value" of that frugal habit. Find out how much your time is really worth with this calculator.

4. Ditch Bad Money Habits By Understanding How They Form

Top 10 Better Money Habits You Can Build This Year

Habits start the very first time you make a choice, whether it's charging something to your credit card or deciding to stay in rather than dine out. Some habits can also be addictive, but if we know the psychology behind what drives our habits — our need for variety, for example, and feeling significant — we can turn away from bad habits and put more focus on new ones we want to develop.

3. Pay Down Debt With Bonus Money

Top 10 Better Money Habits You Can Build This Year

Paying debt down is typically an ongoing activity, but you can accelerate your debt reduction by making it a habit to put all "extra" money (bonuses, cash gifts, tax refunds, and so on) towards your debt. Consider these financial windfalls as already earmarked for debt repayments and you'll see your debt disappear much more quickly than if you just made your standard payments.

2. Invest In Yourself

Top 10 Better Money Habits You Can Build This Year

For every purchase, consider if it's in line with your personal values and your goals; otherwise, you might be either spending too much or simply on the wrong things. Make it a habit to question whether you're spending your money where you spend your time and prioritising the things that can boost your career or your earning potential...or spending it on something else.

1. Remember The Basics

Top 10 Better Money Habits You Can Build This Year

Spend less than you earn and invest the difference.Pay off your credit cards in full each month. Don't buy things you don't need. Most personal finance books and articles boil down to the same bits of advice, but we still need them because it's all too easy to get off track. The start of the year is a great time to get back to basics, but set up reminders for yourself to maintain these good habits throughout the year. Visual triggers, like taped goals on your credit cards or simply calendar notes on every payday, could remind you of what matters most. Often, it's the little things that make a great difference.


Comments

    Be very, very, very wary about who you chose as a financial adviser and avoid mutual funds and use low cost index funds.

    If your investment fees are more than a 1% , think again, fees are the investment killer. Due to the effect of compound interest that extra percent or two of charges can mean millions of dollars over a lifetime!

    Here are some more rules as set out by Millionaire Teacher Andrew Hallam, who has just published his second book. Some might surprise you. Some will shock you. (All the details are available from his website.)

    Nine Laws to Financial Freedom
    Introduction: Getting Real About Denial
    #1 - Only Fools Pay Regular Credit Card Interest
    #2 - Rainy Day Money Prevents Drowning
    #3 - Pay Yourself First
    #4 - Embrace -Your Inner Sloth
    #5 - Be Aware When Financial Advisors Exploit
    #6 - Financial Advisors with a Conscience
    #7- When Falling Stocks Are Better Than Rising Ones
    #8 - Bonds Aren’t For Wimps
    #9 - Start with a Map or Risk Getting Lost
    End Note: Further Suggestions

    http://andrewhallam.com

    Last edited 11/01/15 2:17 pm

      Some (not all) managed funds consistently add value above their fees. Example: The Fidelity Australian Equities Fund has earned a total return of 8.97% per annum over the last 5 years (after their fee of 0.85%), compared to the All Ordinaries Accumulation return of 6.44%. That's out-performance of over 2.5% after fees. Over 7 years, the out-performance is over 3% per annum. Compound that and the fees seem more than worth it.

      Having said that, index funds are a conservative option. Basic theory explains that the average managed fund return must be worse than the average index fund. Picking the right one is a challenge, good performers find it hard to maintain it consistently.

      A financial adviser may not have the ability to pick a good fund, but should have a good grasp about the valuations of different asset classes. The decision of Australian Shares vs. US shares vs. Property Securities vs. Emerging Markets etc. is far more important than the decision to invest in an index fund vs. active managed fund.

    Thankyou for this information, doing the 30 day before, seems a more reachable goal then always told look at just the end product as much budget plans told. Step by step one step at a time is the way to go.

    May I also suggest the site feedthepig.org It's an free American savings site, kinda like in the format like you posted but supported by the goverment for the general public of America.

    It's a realy good site like it has this calculator, you type $4.95 for a coffee per week. It will calculate how much it costs per fortnight, month and even as far as 2 years or yearly. To see straight away the amount coffee costs blows your mind, it's a huge incentive to save.

    You get an oppertunity to see a before & after shot on what you are spending to what you could be saving instead of looking back then realizing. Planning ahead, not playing catch u. cause usually a coffee here or there doesn't seem much at the time but it adds up.

    You are right about going slow. Savings grow over time, like a tree. Hey, money does grow on trees metaphorically.

    If you go to the tools section then to calculators that's the main help. Linked these two as they are what got be interested in budgeting and the sites got a lot of info.

    Hope this helps.

    This is the one I was talking about with type what you may spend on a coffee to find out how much you would save.

    http://www.feedthepig.org/toolbox/calculators/lunch-savings

    ://www.feedthepig.org/toolbox/calculators/home-budget-analysis

    This is the budget calculator, it's really useful as you type in figures as you would normally for a budget but it shows it in a pie graph to make it easier. You can click on each pie slice to see the % plus it shows the rest of what's left over as savings. Really easy to manage.

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