Its all about the habits – part one

Following on from my last post about the benefits of a regular meditation practice, I realised that life really is all about the habits we develop. Good habits generally equals a good life and bad habits can equal a not so good one. Our life is the sum of our habits. Whether these be healthy habits, work habits, self care habits or financial habits. They all shape our life accordingly. However, as this is a financial blog I will focus on the good financial habits.

Getting into good financial habits, especially when we are younger, will pay dividends (literally!) as we get older.

Below I explore some of the good habits to get into now, so that the future you will be more wealthy and extremely grateful to the current you for getting your financial habits in order!

1. Set up automatic savings each month.

We all know we should save, but many people don’t. Often we wait until the end of the month to see what is left to save, usually not much! Instead, get into the habit of setting up an automatic transfer to a savings account at the start of each month. By paying yourself first and having it go out automatically each month, you are more likely to stick to this habit. This will then accumulate and compound over months and years into a very nice nest egg for the future you, hopefully enabling you to semi-retire FIRE.

2. Try not to emotionally spend

Sometimes we can get into the habit of spending to feel better, or emotional spending. We’ve had a bad day so treat ourselves to a new pair of shoes. We are feeling low so splash out on a luxury spa break to lift up our spirits. This isn’t wrong or bad, but its good to get into the habit of being more conscious about spending. Will this purchase actually help me feel better or would I be better calling a friend for a chat or taking some time out to exercise or meditate? Just getting into the habit of questioning our reason for the purchases can cut down our emotional spending.

3. Avoid all high interest debt

This is a super important habit to get into if you do want to become wealthy. Once you have high interest debt, the interest will compound against you and your outgoings will increase, making it even more hard to save for the future you. Some debt is useful debt, for example taking a mortgage to buy a home, but this is usually lower interest. High interest debt are things such as payday loans, credit cards and store cards. Once you start to accumulate this type of debt it is often very hard to find enough room in the budget for saving. If you already have such debt then the best thing you can do is pay this off as quickly as you can and then cut up those cards. Building an emergency fund should then help you to avoid having to take any further high interest debt out. If you have alot of debt you are struggling with do contact one of the many free debt advice organisations for advice. Here in the UK Stepchange is a good one to try.

These 3 financial habits are a great way to start getting on top of finances and building your wealth. In the next post we will look at a few more but do let me know in the comments below your number one good financial habit!