Creating Good Money Habits & Sticking With Them
We all know the “New Year’s Resolutions Effect.” You start out strong on January first but as the weeks and months progress some, if not all, of those resolutions start to slip away. So, how then do you create good money habits and stick with them? I say, you see and feel the positive results of those good money habits. Yes, feel, because as Maya Angelou said, “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”
Creating and maintaining good money habits makes you feel refreshed, less stressed, and yes, joyful. I call that leaning into the joy of money. Anyone who has been struggling with paying their bills or is in credit card debt knows first hand that does not make you feel good. It weighs you down, causes stress, and definitely is not joyful.
Attitude Is Everything
First things first- wherever you are in your financial life you are. Good money habit number 1- stop judging, shaming, or disparaging yourself in regards to your current money situation. Not only does that not help, it blocks you from moving forward.
During my career as a Senior Special Agent with the Department of Justice, I kept a coaster on my desk that said, “Attitude Is Everything.” It was my daily reminder, as I was having my morning cup of coffee, that it starts with me. No matter how complicated the case, how many boxes of financial records I had to review, or how many reports I had to write, my attitude was the driving force of my success.
The same thing happens in reference to your money because it all starts with your attitude. You get to be the driving force of your financial life. Let that soak in. You hold the power to create good money habits, which can help you transform your relationship with money.
So start with positive money talk, post reminders around your house, or put that coaster under your coffee cup. Whatever works for you, start reframing the way you think about money. How about something like this: There is financial abundance in the world and I can tap into it. It is of course more than a wish, money is not going to fall from trees, but this first positive step to good money habits is totally in your control and costs nothing.
Take your Financial Snapshot in this present moment. I find it works best if you put it on paper or your computer but write it down. Take an assessment of your current financial picture. Start by answering these questions:
- How much money do I have coming in every month?
- What are my fixed necessary monthly living expenses? (check your past bills, bank statements, etc.- get accurate numbers)
- What are my variable cost monthly necessary living expenses and how much do I spend on them? (this includes items like groceries and necessary personal care items)
- What are my other expenses that I must pay every month?
- How much are my discretionary monthly expenses? (Many people don’t know this amount and it is one of the areas that can trip you up. If you don’t know, start recording your daily spend for a month- what you find may surprise you.)
- Do I have an emergency fund?
- What are my various insurance expenses? Am I properly insured?
- Am I investing?
- Am I saving for my retirement? (Even if you are young, this is a question to ask yourself. The younger you can start saving for retirement (even if it is initially a small amount) the better. I started saving for my retirement when I was 23 years old.
- How am I handling my income tax situation?
- Do I have debt? (If so, break it down into the different types of debt, the interest rates you are paying, the payment due dates, and know the terms of payment)
No Judgement or Shame
This is an exercise in clarity because again, no judgement or shame belongs here. Reality is reality, you can ignore it, or face it and start creating good money habits to move you in the direction of your dreams. Taking your Financial Snapshot takes a little time and may bring up some emotions. Let any negative emotions pass through you but don’t get attached. You need to know where you currently are to get where you want to go. Ultimately, taking your Financial Snapshot will save you time and stress.
When your Financial Snapshot is complete, take a look at it and see if there is anywhere you can decrease your spending. Once you know exactly where you are spending your money, you get to choose where adjustments can be made.
One area I adjust monthly as needed is my food. I give myself a set amount to spend every month on food, to include grocery shopping, take-out, and going out to eat. I create separate food categories so I really know where my money is being spent.
If I have an unexpected necessary expense during the month that I need to pay, I can reduce my take-out or maybe look in my freezer and pantry to see what I already have at home to cook. I find this liberating, not limiting, because I get to be creative and be the boss of my money. Again, it goes back to attitude. How you choose to look at the situation.
Monthly Zero-Based Budgeting
There is beauty in a Monthly Zero-Based Budget. The beauty is that you are in control of your money and because of that uncertainty and stress are reduced. A budget allows you to know exactly where you are financially every month. As I stated above, you have to know where you currently are financially in order to get where you want to go.
l live by my budget because it creates space and freedom in my life. A Monthly Zero-Based Budget is one of the key building blocks to get you on the path to financial wellness and ultimately financial freedom.
A monthly budget is not difficult to create, maintain, and work. Yes, it takes some time up front but that time is so well spent and recouped quickly. Your budget will become one of your best time savers and not just clock time. It will also become an emotional time saver. Many people spend a lot of time worrying, stressing, and avoiding their money situation. A monthly budget is key to taking charge of your money instead of letting it run you ragged.
Good Money Habits Grow Over Time
Take positive money actions in your life and give yourself kindness and patience. Good money habits, just like any other habit, grow over time. Be gentle with yourself but take the steps. The more you practice good money habits, the better you will feel, and the better you feel, the more you will want to practice good money habits. It’s a total win/win and it is so empowering.
One of my favorite quotes is by Joel Osteen, “We have what we need to fulfill our destiny. But we have to bring it out. And you can’t bring it out being against yourself.” So be for yourself, practice positive money mindset and self-talk, and begin to create and grow good money habits. That necklace in the photo is mine. Always remember: You get to choose your life.
Susan Howell, The MoneyMaestra