Having a healthy relationship with money can be complicated. It’s so easy to be scared of money and not allow yourself to live your life without fear of your finances, but at the same time, it’s easy to completely check out and not think about your finances.
Obviously neither of these situations is good, and the sweet spot, like with most things in life, is somewhere in the middle. The thing is, building a healthy relationship with money takes time and effort – but it’s so worth it!
Here are ten things you can start doing today to start building those healthy money habits!
1. Set Some Goals
Having goals is important – it motivates you by giving you some future reward to look forward to. When life gets hard, you can look at your goals as a reminder for why you’re doing something.
Just make sure that you’re specific in your goal setting. The reason budgeting and money in general is so hard for so many people is because there’s nothing concrete attached to the goals we set to go alongside it.
Oftentimes we just say “I want to save more money” or “I want to not be broke” or something like that. The problem with that is that it’s too vague!
Think about it – you want to save more money, do you know how much more? Do you know why? Is there something that you’re saving for? Of course there is!
Instead of saying that you want to save money, say, I want to save $1,000 by the end of this year so I can have an emergency fund. See how that’s better?
Once you reach your goal you’ll feel incredibly accomplished and more likely to stick with any other goals you set as well, because you know from past experience that you can achieve it.
2. Pay Yourself First
Every paycheck you receive, you should put some money aside towards your savings. Essentially, you should treat your savings just like another bill that you have to pay – you’re paying yourself.
The easiest way to do this is to automate your savings so that every time you get a paycheck, a portion of that automatically gets transferred to a savings account. Preferably one at a separate bank so you won’t be tempted to touch it.
Automate your savings so you don’t have to think about paying yourself – out out sight, out of mind!
3. Invest in Yourself
Similarly to paying yourself first, you need to start contributing to your retirement accounts and investing in yourself. The earlier you start saving the more time your money has to sit and grow, so that you’re *hopefully* set when it’s time to stop working.
Start off by contributing enough to your 401(k) to take advantage of your company’s match (if any).
One of the major benefits of this is that 401(k) contributions are pre-tax, so the impact to your paycheck would be less than after-tax savings.
4. Stay on Top of Your Credit
It’s crazy that our creditworthiness is captured by a single 3-digit number. This number impacts so much of our lives – whether someone will rent to you, how much extra you pay for a car or loan, and even some employment prospects.
So of course it makes sense to make sure your credit stays as healthy as possible. Stay on top of your credit by making sure that you pay your bills on time every month, and check in on your credit report for free to make sure you haven’t missed anything.
5. Live Below Your Means
A good habit to start building while you’re young (but helpful at any age!) is to live below your means.
For example, if living with roommates will save you a small fortune in rent, why not do it? Just because you can afford to spend money on something doesn’t mean that you should.
Prioritize the things that are important to you, but make sure you’re not spending more money that you can afford, or spending everything you earn without building a safety net for yourself.
6. Talk About Money
There’s such a taboo about money that prevents people from talking about it freely.
Why??? I love talking about money! I like hearing what my colleagues make, what they’re choosing to spend money on, and any other pieces of advise anyone and everyone is willing to give me.
There shouldn’t be a stigma associated with money. It’s stigmas like these that keep wages low for some workers over others, and prevent us from learning good money habits.
So go out and talk about money! You never know what you might learn 😉
7. Learn Something New
I get bored when I’m not actively working on something or learning something new. Specially when it comes to my finances.
Learning something new is so helpful to building your financial literacy. How are you supposed to know where to invest your money?
Or the difference between a Roth vs a regular IRA? Or hell, what an IRA is?
Make it a point to always be learning something new about financial topic you’re curious about.
8. Get Things For Free
There are some things that I will happily pay money for, and some that I know I can get for free. I love bookstores and will easily accumulate stacks of books (and spend stacks of money on said books!) but I can get them for free at the library.
So that’s something I no longer pay for. There are some many free resources out there: have a picnic in a public park or beach instead of going out to eat.
Learn new skills with Lynda.com (free with a library card). Choose the things you’re willing to pay for, and know the things you can get for free.
Tying It All Together
Building healthy money habits takes time. You have to be intentional to make sure you build a healthy relationship with money.
Thankfully, there’s small things you can start doing everyday to get you on the road to being more comfortable and smart with your money.
I can relate so much to habit number 6. It’s funny how the topic of money can make people uncomfortable. And I think this kind of mentality is the primary reason why many of us aren’t financially stable.