6 Essential Habits of Financially Healthy People
Ever wish you had more financial success? Laura reviews six key habits of financially healthy people that you can use to transform your life and create a more secure, happy future.
The Greek philosopher Aristotle said, “We are what we repeatedly do. Excellence, then, is not an act, but a habit.” In other words, the small things you do every day are surprisingly important because they add up to transform your life.
In many cases, habits make the difference between having a financially healthy life or a poor one where you never seem to get ahead.
People usually don’t reach their financial goals by getting an unexpected windfall. They accomplish them by developing the right behaviors over a long period of time.
6 Habits of Financially Healthy People
Here are six key habits of financially healthy people that you can develop or take to a higher level to achieve more success:
Habit #1: Financially healthy people have financial goals.
To be financially healthy, you need a plan to turn your dreams into realities. While one person’s definition of success might be to retire early and sail around the world, another’s might be to have a fulfilling second career and work as long as possible. No two people want the exact same things out of life.
No matter your age, you need to have your own set of personal goals. Do you want to be a homeowner, pay for college for your children, become a real estate investor, or take a year long vacation? Financial goals don’t have to be complicated, but each one requires an action plan that breaks it into bite-size pieces that you can work on over short periods of time.
For example, if you want to save $30,000 for a house down payment over the next five years, you’ll need to put aside $6,000 a year or $500 a month. If you want to retire in 30 years with $1 million, you’ll need to invest approximately $800 a month.
Knowing what you’re working and saving for helps motivate you to move in the right direction when you’re tempted to spend your money on something else. Having financial success really comes down to being focused on the long-term and making sacrifices today that will pay off handsomely in the future.
Habit #2: Financially healthy people control impulse spending.
Controlling spending is a struggle for most people, including me. Financially healthy people are simply more aware of the dangers of impulse spending and actively resist it. They don’t care about “keeping up with the Joneses” or buying things to impress other people so they can appear rich. Instead, they want to be rich and wealthy.
Controlling spending is a key to living below your means so you have plenty of money left over each month to save and invest.
Controlling spending is a key to living below your means so you have plenty of money left over each month to save and invest. That’s how you build wealth over time and achieve your financial goals.
Here are some effective strategies to control impulse spending:
Create a spending plan that accounts for your bills, loan payments, and goals. I’ll give you a great resource that will help in just a moment.
Don’t shop as entertainment and stay away from malls and your favorite stores.
Shop online instead of in local stores when possible. Being surrounded by physical items can be more tempting than shopping from a computer or phone. To get discounts, always start online shopping at sites like Ebates or Giving Assistant.
In many cases, habits make the difference between having a financially healthy life or a poor one where you never seem to get ahead.
People usually don’t reach their financial goals by getting an unexpected windfall. They accomplish them by developing the right behaviors over a long period of time.
6 Habits of Financially Healthy People
Here are six key habits of financially healthy people that you can develop or take to a higher level to achieve more success:
Habit #1: Financially healthy people have financial goals.
To be financially healthy, you need a plan to turn your dreams into realities. While one person’s definition of success might be to retire early and sail around the world, another’s might be to have a fulfilling second career and work as long as possible. No two people want the exact same things out of life.
No matter your age, you need to have your own set of personal goals. Do you want to be a homeowner, pay for college for your children, become a real estate investor, or take a year long vacation? Financial goals don’t have to be complicated, but each one requires an action plan that breaks it into bite-size pieces that you can work on over short periods of time.
For example, if you want to save $30,000 for a house down payment over the next five years, you’ll need to put aside $6,000 a year or $500 a month. If you want to retire in 30 years with $1 million, you’ll need to invest approximately $800 a month.
Knowing what you’re working and saving for helps motivate you to move in the right direction when you’re tempted to spend your money on something else. Having financial success really comes down to being focused on the long-term and making sacrifices today that will pay off handsomely in the future.
Habit #2: Financially healthy people control impulse spending.
Controlling spending is a struggle for most people, including me. Financially healthy people are simply more aware of the dangers of impulse spending and actively resist it. They don’t care about “keeping up with the Joneses” or buying things to impress other people so they can appear rich. Instead, they want to be rich and wealthy.
Controlling spending is a key to living below your means so you have plenty of money left over each month to save and invest.
Controlling spending is a key to living below your means so you have plenty of money left over each month to save and invest. That’s how you build wealth over time and achieve your financial goals.
Here are some effective strategies to control impulse spending:
Create a spending plan that accounts for your bills, loan payments, and goals. I’ll give you a great resource that will help in just a moment.
Don’t shop as entertainment and stay away from malls and your favorite stores.
Shop online instead of in local stores when possible. Being surrounded by physical items can be more tempting than shopping from a computer or phone. To get discounts, always start online shopping at sites like Ebates or Giving Assistant.
Unsubscribe from retail newsletters that offer promotions and sales that you can’t resist.
Wait at least 24 hours before buying anything over a certain amount, such as $50 or $100. That allows time for your impulse to settle down so you can decide with a clear mind if you really need something.
Wait at least 24 hours before buying anything over a certain amount, such as $50 or $100. That allows time for your impulse to settle down so you can decide with a clear mind if you really need something.
Go on a 30-day spending fast, where you don’t buy anything except dire necessities for an entire month.
Shop your recurring expenses, such as cable, Internet, phone, and insurance to cut them when possible. And get rid of your landline if you’re already paying for a cell phone.
Calculate what an item costs in time. For instance, if you earn $25 an hour after taxes, buying a $250 pair of shoes costs you 10 hours of work. Are the shoes really worth a long workday? Only you can decide.
Habit #3: Financially healthy people align their values with spending.
Successful people know that money is a tool that can either enslave you or give you freedom. They know that we have limited financial resources, so every cent is valuable.
If I reviewed how you spent money over the past 30 days, I could tell you exactly what you value. Is it clothes, nights out with friends, and fast food? Or do you value paying down high-rate debt, saving for a vacation, or investing for retirement? You get my drift.
Values are the things you believe are most important. They influence the way you live, work, and relate to other people. Only you know what your values are—like family, community, health, learning, self-reliance, faith, generosity, patriotism, creativity, or ambition—and they can change over time.
Getting clear about your priorities is so powerful because it turbocharges your financial will power. Every action you take, including your spending, either builds up or breaks down your values. When your financial life doesn’t align with your core values, you know it deep down in your soul and feel unhappy.
Getting clear about your priorities is so powerful because it turbocharges your financial will power. Every action you take, including your spending, either builds up or breaks down your values.
So, don’t be influenced by what other people spend money on. Identify your values and closely align your financial life with them. Cut back in areas that don’t give you lasting fulfillment so you have more money to achieve meaningful goals and financial satisfaction.
Habit #4: Financially healthy people automate financial goals early.
Since it's easy to go off the financial rails, we have to anticipate our imperfections and create solutions that keep good habits on track. In other words, you have to outsmart yourself when it comes to your money.
Financially healthy people protect their goals by putting them on autopilot as quickly as possible. Here are some ways to automate your finances:
Calculate what an item costs in time. For instance, if you earn $25 an hour after taxes, buying a $250 pair of shoes costs you 10 hours of work. Are the shoes really worth a long workday? Only you can decide.
Habit #3: Financially healthy people align their values with spending.
Successful people know that money is a tool that can either enslave you or give you freedom. They know that we have limited financial resources, so every cent is valuable.
If I reviewed how you spent money over the past 30 days, I could tell you exactly what you value. Is it clothes, nights out with friends, and fast food? Or do you value paying down high-rate debt, saving for a vacation, or investing for retirement? You get my drift.
Values are the things you believe are most important. They influence the way you live, work, and relate to other people. Only you know what your values are—like family, community, health, learning, self-reliance, faith, generosity, patriotism, creativity, or ambition—and they can change over time.
Getting clear about your priorities is so powerful because it turbocharges your financial will power. Every action you take, including your spending, either builds up or breaks down your values. When your financial life doesn’t align with your core values, you know it deep down in your soul and feel unhappy.
Getting clear about your priorities is so powerful because it turbocharges your financial will power. Every action you take, including your spending, either builds up or breaks down your values.
So, don’t be influenced by what other people spend money on. Identify your values and closely align your financial life with them. Cut back in areas that don’t give you lasting fulfillment so you have more money to achieve meaningful goals and financial satisfaction.
Habit #4: Financially healthy people automate financial goals early.
Since it's easy to go off the financial rails, we have to anticipate our imperfections and create solutions that keep good habits on track. In other words, you have to outsmart yourself when it comes to your money.
Financially healthy people protect their goals by putting them on autopilot as quickly as possible. Here are some ways to automate your finances:
Participate in a retirement plan at work, such as a 401k, 403b, or 457 plan. They work so well because contributions must come out of your paycheck before you ever see they money.
Set up recurring transfers from your bank account to a traditional or Roth IRA.
Set up recurring transfers from your bank account to a traditional or Roth IRA.
Open up a 529 savings plan to pay future college expenses for yourself or a family member.
Use direct deposit for savings by having a portion of your paycheck, benefits, or tax refund sent to a bank savings account. By the way, this is a great strategy to build your emergency fund or to save for short-term goals like holiday gifts or a vacation.
The earlier you start saving and investing, the more financial security you and your family will have. You’re never too young to begin planning for your future.
Did you know that there’s no age restriction on having a traditional or Roth IRA? Even teenagers who get their first job can have one. Let’s say you earn $3,000 working a summer job. That qualifies you to contribute up to $3,000 in either type of IRA.
If you invested just $3,000 per year or $250 per month from age 15 to 65 (or over any 50 year period) with an average moderate 6% return, you’d amass $1 million dollars to spend in retirement. Investing even small amounts pays off when you start early.
Habit #5: Financially healthy people have regular money checkups.
Just like you should have annual medical and dental checkups, you should do the same with your finances. If you don’t review your financial plan and goals, it’s easy to lose track of your progress.
Financially healthy people know that they need to accomplish tasks like adjusting spending plans, tracking net worth, reviewing retirement investments, and reevaluating insurance needs.
You need to know exactly how much you make, how much you spend, and how much you save. You simply won’t succeed if you don’t have a clue about your monthly income and outgo. Another key money checkup is to monitor your Personal Financial Statement (PFS), which tracks your net worth. chapter is jam-packed with information including:
Habit #6: Financially healthy people protect their ability to earn.
Our current and future financial security hinges on our ability to earn an income. Successful people know that without good health, you won’t have the mental or physical energy to create a healthy financial life.
While it’s important to reduce expenses, you simply can’t grow wealthy clipping coupons. There’s a limit to the amount of costs you can cut—but there’s no limit to the amount you can earn! So stay focused on big wins that could dramatically improve your finances.
Always have the mindset that your job or business income could end right away. While that might seem depressing, it’s a great prompt to improve your personal network, look out for new opportunities or responsibilities, learn new skills, and improve or add new revenue streams.
Financially healthy people don’t wait for opportunities to fall into their laps or rely on luck. They help themselves by staying sharp, seizing opportunities that others might miss, starting a side-hustle, trying a new career, or negotiating for a raise.
When you take the initiative to improve your health, your mindset, and the value you can provide to the world, you also take charge of your financial success.
How to Handle Financial Failure
Financially healthy people have a success mindset that prevents them from getting discouraged. We all take financial hits to the gut from time to time, like losing a job or having massive unexpected expenses.
Be prepared for hard times and keep your chin up no matter what. If you make a big financial mistake (and who hasn’t), learn from it and never let it happen again. Failure can teach us important lessons if we allow it.
Don’t be afraid to turn to a professional—such as a retirement planner, tax accountant, credit counselor, or insurance agent—when you need help. Successful people usually seek advice and rely on pros who specialize in different areas. They cost money, but usually pay for themselves quickly.
To sum up, financially healthy people stay focused on what’s important, use their time wisely, and build habits into their lives that get results. No, it’s not easy.
But if you’re willing to stop procrastinating, take stock of where you are today, and make some small changes, you can set yourself up for a rewarding and secure financial future.
Use direct deposit for savings by having a portion of your paycheck, benefits, or tax refund sent to a bank savings account. By the way, this is a great strategy to build your emergency fund or to save for short-term goals like holiday gifts or a vacation.
The earlier you start saving and investing, the more financial security you and your family will have. You’re never too young to begin planning for your future.
Did you know that there’s no age restriction on having a traditional or Roth IRA? Even teenagers who get their first job can have one. Let’s say you earn $3,000 working a summer job. That qualifies you to contribute up to $3,000 in either type of IRA.
If you invested just $3,000 per year or $250 per month from age 15 to 65 (or over any 50 year period) with an average moderate 6% return, you’d amass $1 million dollars to spend in retirement. Investing even small amounts pays off when you start early.
Habit #5: Financially healthy people have regular money checkups.
Just like you should have annual medical and dental checkups, you should do the same with your finances. If you don’t review your financial plan and goals, it’s easy to lose track of your progress.
Financially healthy people know that they need to accomplish tasks like adjusting spending plans, tracking net worth, reviewing retirement investments, and reevaluating insurance needs.
You need to know exactly how much you make, how much you spend, and how much you save. You simply won’t succeed if you don’t have a clue about your monthly income and outgo. Another key money checkup is to monitor your Personal Financial Statement (PFS), which tracks your net worth. chapter is jam-packed with information including:
Habit #6: Financially healthy people protect their ability to earn.
Our current and future financial security hinges on our ability to earn an income. Successful people know that without good health, you won’t have the mental or physical energy to create a healthy financial life.
While it’s important to reduce expenses, you simply can’t grow wealthy clipping coupons. There’s a limit to the amount of costs you can cut—but there’s no limit to the amount you can earn! So stay focused on big wins that could dramatically improve your finances.
Always have the mindset that your job or business income could end right away. While that might seem depressing, it’s a great prompt to improve your personal network, look out for new opportunities or responsibilities, learn new skills, and improve or add new revenue streams.
Financially healthy people don’t wait for opportunities to fall into their laps or rely on luck. They help themselves by staying sharp, seizing opportunities that others might miss, starting a side-hustle, trying a new career, or negotiating for a raise.
When you take the initiative to improve your health, your mindset, and the value you can provide to the world, you also take charge of your financial success.
How to Handle Financial Failure
Financially healthy people have a success mindset that prevents them from getting discouraged. We all take financial hits to the gut from time to time, like losing a job or having massive unexpected expenses.
Be prepared for hard times and keep your chin up no matter what. If you make a big financial mistake (and who hasn’t), learn from it and never let it happen again. Failure can teach us important lessons if we allow it.
Don’t be afraid to turn to a professional—such as a retirement planner, tax accountant, credit counselor, or insurance agent—when you need help. Successful people usually seek advice and rely on pros who specialize in different areas. They cost money, but usually pay for themselves quickly.
To sum up, financially healthy people stay focused on what’s important, use their time wisely, and build habits into their lives that get results. No, it’s not easy.
But if you’re willing to stop procrastinating, take stock of where you are today, and make some small changes, you can set yourself up for a rewarding and secure financial future.
Happy Investing
Source:Moneygirl
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