Most day-to-day spending habits are just that, "habits." They are items that people don't necessarily need, but also don't think twice about spending copious amounts of money on each year. Take, for example, the popular $10.00 a day takeout lunch. Assuming that you receive 15 days of paid vacation, that leaves 245 work days with $10.00 per day lunches, which equals $2,450.00 spent each year on lunches. Over the course of an average career, or 40 years, suddenly your $10.00 a day lunch turns into a $98,000 spending habit. Isn't it time that you turned your bad spending habits into healthy financial decisions?
A 1, 2, 3, Guide to Healthy Financial Habits
Step 1: Schedule a "money minute" every day.
Have you ever been surprised by the lack of money in your account? Experts advise scheduling a "money minute" each day. Every day take a minute to look at your account. Review your balance and recent transactions. Make a note of how far you are from achieving your monthly savings goal.
By taking a minute to check daily on your account, you can eliminate financial surprises. Frequently checking on your account will also help you to stay motivated towards your financial goals. Whether it is saving $100 a month or simply spending less than the month before, your goals will always be in sight when you take the time to establish the healthy "money minute" habit every day of the week.
Step 2: Set up automatic monthly transfers to your savings account.
The majority of young professionals forget to put money into their savings accounts. However, setting an automated process is an easy way to efficiently grow your savings account and / or retirement fund. To set up an automatic transfer you can:
- Call your bank or log-on online.
- Follow your bank's specific guidelines to set a monthly automatic transfer from your checking account to your savings account.
- Start by saving 1 percent to 2 percent of your income.
- Set a calendar alert each month to review your savings account.
Watching your savings account grow is a simple reward that will encourage you to keep contributing monthly funds for a long-lasting result.
Step 3: Adopt and stick to your healthy spending mantra.
Behavioral economist Dr. Hersh Shefrin recently reported that creating a "financial rule of thumb" can help individuals guide their spending decisions, which can subsequently lead to better money management. To adopt your spending mantra start by thinking about the one spending habit that you would really like to change; the initial example of $10.00 per day lunches is a great starting point. Next, create a mantra that is designed to combat your unhealthy spending habit. For example, "I will only spend $10.00 on lunch if I haven't gone out to dinner all week." Through the latter mantra, you will start to spend less on costly lunches, while also remaining cognizant of the money that you are spending going out to dinner.
In conclusion, adopting healthy financial habits is as easy as following the above three steps all the way to a fuller bank account. When you establish consistent financial habits, it is easier to save, manage, and spend your money wisely. In case you are thinking of procrastinating, remember that good financial habits can have a lifetime of positive rewards, so start making healthy changes today and reap the benefits tomorrow.