Better Money Habits

13 Better Money Habits You Should Start in 2024

Better money habits may need time and effort, but approaching it incrementally and embracing improved money habits can be a transformative strategy. By taking measured steps, you not only regain command over your finances but also initiate the construction of a more promising future for yourself.

If saving for the future feels challenging or you find yourself trapped in a paycheck-to-paycheck cycle, it may stem from less-than-ideal financial habits. Drawing insights from Financial Coaches, we’ve distilled practical advice to break free from detrimental practices and embrace positive ones in the new year. The result is a compilation of 13 healthier money behaviors to adopt in 2024. Trim your expenses, bolster your savings, and stay committed to your budget!

Why we need Better Money Habits?

Embarking on a journey towards enhanced financial well-being involves the practical integration of improved money habits into your daily life—a series of intentional changes and routines geared towards realizing your fiscal objectives and fostering a healthier connection with money. Cultivating these positive habits holds the promise of a more comfortable lifestyle, diminished financial stress, and a heightened state of readiness for what lies ahead.

Initiating the cultivation of better money habits hinges on the elimination of detrimental practices, such as impulsive spending, and the substitution with beneficial alternatives, like making purchases solely to fulfill genuine needs. This transformative shift lays the groundwork for a more secure and fulfilling financial future.

Better Money Habits

Experts Reveal 13 Better Money Habits to Begin

Uncertain about where to commence your journey towards cultivating improved money habits? Look no further – Many Financial Coaches have curated insightful tips to guide you in seamlessly incorporating positive financial practices into your everyday routine. Brace yourself for a revelation: by forgoing your daily coffee shop visits and honing your coffee-making prowess, you could potentially save an impressive sum exceeding $900 annually. Take the plunge into transforming your day-to-day habits and watch your financial landscape undergo a positive evolution.

First and foremost, pay yourself

Embarking on the journey to improve money habits doesn’t imply a complete renunciation of personal preferences. With careful planning, it’s entirely possible to strike a balance between indulging in one’s likes and financial prudence. According to Smout, the key lies in prioritization: “Allocate funds to yourself and address your debts before satisfying your desires. While it’s acceptable to spend on things we enjoy, it shouldn’t come at the cost of our future, neglecting savings, or attempting to evade the past by ignoring debt obligations.”

2. Learn From Your Financial Errors

In the pursuit of cultivating improved money habits, it’s almost inevitable to encounter missteps. However, the key to fostering a healthier relationship with money lies in embracing these mistakes as valuable lessons. Even Financial Coaches, esteemed for their expertise, acknowledge their past errors and generously share the insights gained.

Take, for instance, Mandhana, who learned a costly lesson from a $5,000 loss in currency trading on margin. This experience prompted a shift in approach, leading him to forsake margin investing and adopt a buy-and-hold strategy, a decision that has proven to be a wise and enduring choice. The acknowledgment and rectification of mistakes are integral steps on the journey to financial enlightenment and stability.

3. Set some time for your finances

Dedicating a specific time slot in your weekly schedule to address your finances lays a solid foundation for success in fostering positive money habits. Reserve one day each week to assess your financial landscape and identify areas for improvement.

 Better Money Habits

Financial Coach Ralph Schule, CPA, advocates for a structured approach to time allocation through the bottom-up method. This involves evaluating the surplus funds remaining each week after factoring in expenses and savings. Following this approach, Schule advises adhering to a spending limit that never exceeds the available surplus amount—excluding emergencies. This disciplined strategy ensures mindful financial management and facilitates the cultivation of enduring positive money habits.

4. Examine -and reduce -Your Regular Expenses

The prospect of scrutinizing our monthly expenditures might induce trepidation in many. However, fostering the habit of regularly assessing your expenses can be a potent strategy to trim unnecessary spending and cultivate a habit of saving.

Better Money Habits

Financial Expert Om Mandhana, CFP, offers valuable insights on curbing routine expenses:

  • Coffee: Opt for black coffee when indulging in a coffee shop visit, as it tends to be more cost-effective. Alternatively, brew your coffee at home and minimize outings to buy coffee.
  • Phone: Explore mobile virtual network operators (MVNOs) or consider downsizing your plan and data allowance.
  • Fitness: Instead of investing in gym memberships and personal trainers, explore free fitness activities like online workout videos, running, walking, or hiking. If the gym is non-negotiable, allocate no more than 2 percent of your income to a membership.
  • Food: Enhance your cost-effectiveness by preparing meals at home and opting for healthier eating choices. Embrace the practice of meal prepping for the week and enjoy packed lunches.

By implementing these tips, you not only gain more value for your spending but also foster a financial mindset geared towards savings.

5. Make Student Loan Repayment a Top Priority

For those grappling with student loans and aspiring to cultivate improved financial habits in the coming year, directing attention towards repaying those loans can prove highly beneficial. Beyond the obvious advantage of averting substantial interest payments, the peace of mind that accompanies responsible loan repayment is an added bonus.

Owning student loans is a common and respectable circumstance, yet the key lies in borrowing only what’s essential. Financial Coach Jared Smout, CPA, candidly shares his financial insight, underscoring the significance of prudent borrowing. Reflecting on his own experience, he acknowledges the misstep of taking out more student loans than necessary. While motivated by familial responsibilities, Smout advocates for exploring alternative avenues of sacrifice to circumvent unnecessary debt burdens.

6. Improve Your Credit Score

A robust credit score isn’t just a gateway to favorable loan interest rates; it’s a testament to your sound financial practices. The endeavor to build and elevate your credit score not only positions you for reduced interest rates on loans but also opens doors to lower credit card interest rates and finance charges, along with securing better insurance rates.

While continuing to utilize your credit card judiciously, there’s a strategic approach to maintain and enhance your creditworthiness. Ensure timely, full payment of your bills and consider allocating fixed expenses to your credit card – a savvy move that not only fortifies your credit score but also unlocks the potential for earning valuable rewards. Mastering this delicate balance enables you to wield your credit card as a tool for financial growth and benefit.

7. Maintain Your Net Worth

Your net worth, the sum of your possessions minus your debts, encapsulates your financial standing. Keeping abreast of this metric and comprehending its implications serves as a pivotal tool in monitoring your financial trajectory, expenditure patterns, and overall money management. Regularly assessing your liabilities, ensuring they remain below your assets—encompassing funds in your checking account, 401(k), investments, owned vehicles, and more—emerges as a prudent financial practice for those aspiring to bolster their fiscal acumen. Instilling this habit contributes to a heightened financial awareness and positions you on the path to enhanced financial savvy.

8. Begin a Savings Plan

For those embarking on the journey to cultivate improved money habits, Financial Coach Anthony Castella, CPA, underscores the paramount importance of consistent saving. He advocates for the practice of allocating a portion of each paycheck to savings. Simplifying this process, Castella suggests automating the transfer of funds directly from your paycheck to designated savings and investment accounts.

Better Money Habits

If you’re already on a savings trajectory and aim to amplify it, Dike proposes a systematic approach. This involves delineating savings goals, setting deadlines, and subsequently calculating the weekly or monthly contribution required to meet those objectives. Once determined, these amounts are then automated, placing your savings plan on autopilot for seamless and disciplined financial progress.

9. Avoid Emotional Expenditure

A detrimental money habit often succumbs to the allure of instant gratification, catering to fleeting impulses,” advises Dike. Mitigate emotional spending by refraining from outings during times of stress or sadness, eliminating shopping apps, and leaving your credit card at home. If the temptation to make a purchase arises, adopt the practice of deliberation – take a few days to contemplate the decision, evaluating its alignment with your budgetary constraints. This intentional approach serves as a powerful deterrent to impulsive spending and contributes to the cultivation of sound money habits.

10. Spend Your Money Wisely

“Living within your means” entails spending less than your monthly income, a principle emphasized by Castella. He advises striving to consistently spend below your earnings whenever possible. In instances where financial constraints arise, Castella suggests prioritizing essential expenses and minimizing non-essential spending to prevent excessive debt accumulation.

Prudent decision-making is crucial in maintaining a lifestyle aligned with your means. Smout echoes this sentiment, highlighting the importance of avoiding speculative choices. He emphasizes the potential pitfalls of living beyond your means, cautioning against spending more than you earn based on optimistic but unfulfilled expectations. A disciplined approach, grounded in current realities rather than anticipated futures, serves as a reliable strategy for sustainable financial health.

11. Prepare for Emergencies

Emergencies can arise without warning, underscoring the importance of proactive preparation to safeguard your financial stability. Regularly contributing to an emergency fund and earmarking a portion of your monthly paycheck for savings are prudent measures to fortify your financial resilience. Mandhana advocates for maintaining ample life insurance coverage, encompassing living expenses for a decade, children’s education, mortgage obligations, and other outstanding loans.

Recognizing life’s unpredictability, our experts advocate for the proactive cultivation of a habit—planning for emergencies. Schule, in particular, suggests anticipating the unforeseen needs of family members, such as parents and siblings. While the need to occasionally decline such requests may arise, the sense of preparedness and the ability to occasionally say “yes” can significantly alleviate the impact of unexpected circumstances.

12. Purchase Only What You Require

In instances where spending on non-essential items becomes a concern, cultivating the habit of pausing to reflect before making a purchase can prove invaluable. Financial Coach Karen Layfield, CPA, imparts timeless wisdom inherited from her mother: “It’s not a bargain if you don’t need it.” Embrace this mantra and conduct thorough research, questioning whether the intended purchase is a genuine necessity or merely a desire.

Better Money Habits

In situations where a purchase is indeed essential, consider exploring secondhand options. Liberating yourself from the pursuit of the latest technology or fashion trends, and opting for pre-owned items, not only benefits your wallet but also contributes to environmental sustainability. This conscious approach to consumption aligns with both fiscal prudence and ecological responsibility.

13. Pay Off Credit Card Debt

As per insights from Financial Coach Joe Dike, CPA/PFS, CFP, a commendable money habit manifests in either debt reduction or a tangible return on investment. Beyond the positive impact on your credit score, diminishing your credit card debt emerges as a strategic move to curtail monthly interest fees.

The peril of credit card debt escalating becomes evident, especially when your credit card becomes the primary mode of payment. The cumulative effect of accrued interest and finance charges can swiftly spiral out of control. Embracing prudent financial practices involves not only credit score management but also a concerted effort to rein in and reduce credit card debt, thereby alleviating the burden of recurring interest expenses.

In conclusion

The positive news is that you’ve already surmounted the most challenging step in cultivating improved money habits—knowing how to initiate the process. Whether you opt for a gradual approach by incorporating just one of these tips or choose to experiment with a couple, integrating them into your spending and saving practices can serve as a valuable introduction to budgeting. This gradual assimilation paves the way for a more financially disciplined future, creating a pathway toward enhanced stability and prosperity for yourself.

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