Contrary to popular belief, it's never too late to start forming new habits as an adult! With the ‘prime time to form habits” myth debunked, there is really no bad time to start making healthy financial habits. Money can be a root problem for many families, individuals and couples around Australia, with the rise of Afterpay and other payment plan options facilitating debt and encouraging spending.
Whether you’re wanting to resolve debt, put a deposit down for a home, or start a family, there are a multitude of reasons to save, or want to achieve financial freedom. To make things easier, we’ve collected 10 everyday financial habits that you can incorporate into your lifestyle to achieve financial success! Keep reading to find out more.
1. Track Your Daily Expenses
While this may seem the most obvious habit to form, it is one of the most crucial, if not the fundamental building block of forming healthy financial habits. Tracking where each dollar and cent is going can help you identify where you need to curb your spending because debt can easily creep up and accumulate.
An added benefit is also discovering ‘hidden costs
, like account fees, subscriptions you don’t use, or mistaken transactions’. If you’re fully aware of where your money is going, you’re more likely to be confident and less stressed when it comes to your finances.
If you’re not handy with financial apps, you can rely on your bank statements or even resort to the good old pen and paper. You’ll want to look at all your statements, receipts and take note of any recurring bills or payment plans organised. But for the sake of convenience and accessibility, here are some awesome apps available which you can easily document, store, collate and analyse all your spending data!
Not only does this app connect to a huge variety of banks, the free version is very capable of doing everything you need. Other features include linking credit cards, your superannuation, loans, personalising your priorities, and automating records. The most nifty feature however, is the budgeting tool which uses the data from your previous spending to provide you with your very own budgeting tool. How cool! If you did want to go that extra step further, the Premium Plan only costs $9.90 a month. You can access MoneyBrilliant through the Apple App Store or Google Play Store.
The crème de la crème of budgeting apps is Pocketbook. With its automatic syncing feature, Pocketbook stands out from the crowd. This FREE app encrypts your data so you don’t have to worry about losing any data as it’s all secure. It automatically categorises the majority of your transactions, integrates your bank accounts, credit cards and loans, as well as offering a comprehensive FAQ for beginners. It’s your very own personal accountant in your pocket! This app is available on the Apple App Store and algo Google Play Store.
Spendee can be used whenever and wherever you need it, as it syncs all your bank accounts so that you can track them all in one easy-to-navigate place. It can also be used over the world as it operates in multiple currencies for people who need to switch. It’s pretty cool because it has a shared wallet feature for couples, families or roommates who need to share expenses. The interface is simple and graphic to clearly categorise your spending so you can see if you need to cut back on spending and need to start saving more. Spendee Basic is free, but the Plus and Premium packages come with yearly fees and are available on the Apple App Store and Google Play Store.
2. Automate setting up automations!
If you don’t know what automatic payments are then you’re missing out!! Setting up automatic transfers or payments is so easy - you only have to do it once and then it does all the work for you. Examples of how automatic payments can help you are:
- Setting up direct debits for monthly bills
- Transferring a set amount aside after a paycheck into a separate account
- Paying off a monthly installment (loan, debt, mortgage)
3. Needs or wants?
Learning to separate needs from wants may seem like an easy habit to form, but for impulse shoppers or those who enjoy indulging in luxury life has to offer, it can be a difficult habit to establish and live by consistently. To get an idea on how you spend money, take a look at your transaction history and highlight what are 'needs' — essential items you need to live. After identifying how many of your purchases are "wants”, you can better devise a plan on how you cut back on these expenses to save money.
4. Budget everything
This step is what you should do after you analyse your tracking. Being able to see where your money is going can allow you to make decisions about how much you need to be putting aside each week, fortnight, month or year. This can really help you work towards goals with big targets. You can easily do this by setting up a spreadsheet in Google Docs but most of the apps in the ‘tracking’ section should help you do this much more efficiently. Click the link if you’re needing a refresher on how to manage your personal finances
5. Set limits and reminders
Now that you have learnt how to track your spending and form a budget, you include setting spending limits and reminders to keep you on track in achieving your financial goals. These can either be on your banking app (ANZ has a handy goal target that helps you see how much you’ve completed and how far you have to go), or you can set reminders on your phone to alert you when you might need to pay a bill (or set up an automation!) or achieve a financial goal by. These alerts can help you cover these expenses when you need to have some extra cash in the bank.
6. Say no to credit
Minimising your debt is one of the best financial habits that will help you reach your financial goals. Don’t get us wrong, credit cards can be an incredibly useful tool and definitely come in handy in certain situations however if you’re prone to overspending and ‘treating yourself’ it might be helpful to minimise your credit card use. This will allow you to decrease the temptation of spending unnecessarily, increasing your debt and ruling out any impulse buys.
7. meaningful financial goals
Having a goal to work towards is incredibly motivating for a lot of people. When it comes to financial success, setting realistic goals can help you achieve them much quicker. Don’t worry about whether the goal is too big or small, all financial goals matter as they are helping to form this fundamental habit. It could be something as simple as wanting to save $100 in two months to buy a new outfit, or trying to save $2000 for a little getaway at the end of the year for you and your significant other. Other bigger goals could be to pay off $10,000 of debt by the next EOFY, increase your investment portfolio by $15,000 or save $50,000 for a house deposit. Having a specific goal in mind can help you visualise what you’re working towards.
8. Passive income
Passive income, side hustle, whatever you want to call it; people are using this method to be financially stable, pay off their debts faster and increase their overall wealth. So how do you do it?! You make money through venues that require minimal involvement and upkeep. Here are some examples:
- rental properties
- dividends from stocks
- side businesses
Or even renting a room in your home, or your car on weekends are all easy passive income methods that can help you increase your income with minimal involvement.
Renting out a whole house in Brisbane for example can earn you $200 a week or more easily. When you accumulate this and work it out, you’ll be surprised with how much you can put towards your retirement!
9. Cook your meals
Work can get busy, life can get in the way and cooking your own meals sometimes just isn’t a priority! Ordering takeaway or through food delivery apps after a long day at work might sound ideal, but when you take into account all the coffees and work lunches you buy throughout the week, it all adds up! If you buy a $5 coffee every working day, you’ll easily rack up a bill that’s over $1000! Now think about how much extra money you could earn if you invested it instead…
There are plenty of free resources online like recipe blogs and engaging YouTube videos that can give you cheap ideas and meal plans to help you cook instead of eating out constantly. Some keywords to type in are, "cheap dinner ideas”, "how to cook on a student budget”, or "affordable meals to cook”. Time to get your chef hat out and get in the habit of cooking at home.
10. Beware of emotionally-driven purchases
As humans we are emotional by nature- something to be celebrated! However, it’s not always useful when it involves money management. Studies have found
that people who are sad will pay more for something or sell it for less, compared with those who are in a normal emotional state. Being highly stressed also leads to impulsive or irrational financial decisions. In these situations, the age-old advice of "sleeping on it” makes a lot of sense.
While there is nothing wrong with buying the things you'd like from time to time when they are within your budget, it is important to not let your emotions dictate how to spend your money for the majority. The best way to tackle this is to frame your thinking about shopping and money differently and make it a habit to see money in a positive light that necessarily doesn’t need to be spent in order to make you happy.
The first step is to recognise how and when you feel like spending money during emotionally driven spending sprees:
Emotional spending is often high when:
- You are seeking immediate gratification
- Shopping after a paycheck
- Shopping to distract you from stress
Things you can do to limit your emotional shopping:
- Limit temptation (going to shopping centres)
- Opt out of advertisements or marketing emails
- Be aware of your habits
- Stay calm and breathe
- Don’t save your credit card details on online shopping websites
And that’s a wrap! We hope you found one of these habits helpful and you find it easy to incorporate into your daily routine. If you nail these habits with your own personal finances, it makes it a lot easier to start your own business or help others also achieve financial freedom. If you are a small business owner and are needing a little extra help with your bookkeeping and taxes, don’t hesitate to contact the expert team
at Shoebox Books. We’re able to take care of all your bookkeeping needs
while you get back to running your business!