Habits make up a much larger part of ourselves than we’d like to admit. We have many different habits – both good and bad. From how we behave during certain situations to how we do certain activities. In fact, studies have shown that a habit is more important than willpower when it comes to deciding our actions. We even have financial habits that we create after a while. Some habits put us in financial ruins. But some habits actually put us on the road to financial success.
Habits for Financial Success
But what habits are those money-saving habits exactly? More importantly, which should you cultivate to become financially stable yourself? Is it saving money? Is it setting better goals? Or is it a combination of a few different steps? That’s what this guide is here to answer. Check out these 10 habits the debt-free and rich take on to stay debt-free and rich. Maybe you’ll find some that you can pick up yourself.
Small Things Add Up
While a dollar here and a dollar there may not seem like a lot, it can add up. One of the key ways to being financially stable is understanding that small, consistent spending can add up to big numbers. For example, one $2 cup of coffee isn’t much; but buying one every morning for a year equals $730. That is a lot for a coffee in the morning. Now think about all the other ways you’ve unnecessarily spent your money. Minimizing even small but consistent costs can lead to big savings.
There’s an old axiom that says it’s impossible to get where you’re going if you don’t know where that is. That same principle applies to your finances. If you don’t have an idea of your desired financial future, then you won’t be able to achieve it. Setting goals – and more specifically goals you can achieve – is important. An example could be finally starting that emergency fund or savings account. Its best to start small and work your way up to the big goals you have.
Set Concrete Steps
Building off the above point, the easiest way of achieving a long-term goal is to create steps to achieve it. Let’s say you want to have 80k in retirement by the age of 40. Rather than having some fuzzy idea to save money every month, think of it another way. It’s far more effective to divide that 80k into the remaining months before you turn 40. Then you commit to putting that number into your retirement savings at the end of each month. Setting actual steps you can take forces you to stay on a path to actually reach your goals.
It can get really easy to overspend on things you don’t need. Especially when you hit sales and think you are getting a good deal. The reality is, you may be spending just because it’s a sale and not because you actually need things. Stopping yourself from buying things you want in the spur of the moment is an underrated skill. When it comes to keeping your finances stable, however, it should really be ranked higher. So step away from the purchase and think about saving. A little impulse-control can go a long way.
Taking out a title loan or signing up for credit cards isn’t usually associated with financial stability. But a line of credit or a loan are powerful tools to fix financial challenges and invest in the long-term. Knowing when it’s appropriate to use a loan is a key financial habit to form for success. Especially when you are dealing with an unexpected situation, a title loan could really help you out. From medical emergencies to sudden home repairs, your title loan could seriously help.
Research Before Investing
Speaking of investing, an important financial habit of the rich and well-off is they research before investing. Even just quick research can mean the difference between a profitable investment and one that’ll just drain your finances. So take some time to really understand investing and what your options are. Once you know what your options are, you are ready to make a smart investment. You wouldn’t want to drain your finances on a bad investment choice. If it’ll mean avoiding making a bad investment, then I’d say it’s worth the time.
Don’t Eat Fast Food
The reason most of us eat fast food is simple: it’s fast. Fast food places thrive on their convenience and our busy lifestyles. Pretty soon it becomes a habit to choose their quick food versus cooking our own food. But it’s also a habit worth breaking. While it may be cheap in the short term, in the long term it’ll wreak havoc with health. As the old saying goes, a lack of a cheeseburger a day keeps the mortician away. Plus, a lot of fast food places can be pretty pricey expensive. If you break the fast food habit then you will be saving both your health and cash. What could be better than that?
Don’t Depend on Gut Feelings
As much as we like to think of ourselves as rational, deliberate beings, that isn’t always the case. The truth is that a huge number of our decisions comes from our gut – including our financial decisions. And unfortunately, the gut doesn’t always make the best decisions or consider all the information at hand. Take a moment to step back and consider the options before making big decisions on your cash. It could be the difference between financial ruin and financial stability for your future.
One of the keys to being financially stable is learning to think in the long-term instead of the short-term. Your finances are, after all, possibly the longest term project you’ll ever have to manage. And getting into the habit early of thinking long-term will be a huge help. One example would be thinking about your retirement. If you see yourself wanting to retire at the age of 65, you’ll have to start planning now so you can set yourself up to comfortably be retired at that desired age. Or if you want to be mostly debt-free by 50, you start taking those steps now.
An important financial habit the debt-free and rich take on to cultivate alongside long-term thinking is to be detail focused. While it can be exhausting, focusing on financial details can prevent potentially catastrophic errors that can cost you thousands of dollars down the line. The best way to keep track of all the little details is to write it down. Keeping a spending journal and having your financial situation down on paper gives you a clear picture of what is going on.
The Bottom Line
It’s no surprise that, when it comes to being financially stable, one of the key elements is forming and maintaining healthy habits. These financial habits the debt-free and rich take on could help you out. Take a look at some of your financial habits - are they working for you or against your money goals? Figure out which ones are worth keeping and which ones are draining your bank account. With a little patience, you'll watch those numbers go up-up-up the longer you stick to these positive financial habits!
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