Adopting good money habits is the only way to create a life free of financial stress. Developing a daily routine of focusing on your financial health helps you achieve your life goals, including getting rid of debt and building up your emergency and retirement savings accounts. As with all habits, once you incorporate them into your life, you’ll find yourself doing them without even thinking. So, here are four good money habits you can adopt today to put you on the road to financial freedom.
1. Become a Conscious Consumer
Conscious consumers are constantly alert for ways to save money. When you have consumer consciousness, you know that there are bargains to be found everywhere.
For example, does your bank offer free checking? If not, it’s time for a conversation or to switch your accounts to a different bank.
What about your monthly bills? Are you getting the best rates for your internet and cell phone plans?
A consumer-conscious habit also means looking for the best price for the value rather than brand loyalty. For instance, you use your shopping apps to help you find the best deals, and you’re not afraid to let the retailer know that you can buy the same product at a competitor for a better price.
2. Automate Your Financial Life
Automating your bills payments means that you won’t be late, which will help you maintain a good credit score. With a good credit score, you’ll save money when you secure financing.
Automating your savings deposits means that you’ll be free of the temptation to spend that money rather than to pay yourself first. As a result, you’ll meet your retirement and emergency savings goals and will avoid the need to use credit cards or loans to pay for unplanned expenses.
- If you have a 401(k) at work, it’s easy to automate your contribution to the plan.
- Ask your human resource office to direct a portion of your salary to your designated savings accounts, with the balance going into your checking account.
- Use money apps that automatically round up your credit card expenditures. The extra goes directly to your designated savings accounts.
3. Put Your Spare Change in a Jar
By the end of the day, most people have a pocket full of change from purchases throughout the day. Rather than use the change to buy something else, keep it, and when you get home, put it in a jar. This is one of the easiest good money habits you can adopt, and you’ll be surprised how much you’ll have by the end of the month. Depending on the number of your out-of-pocket expenses, you might need to empty the jar monthly or annually. You can designate the spare change for anything you like: savings, debt reduction, or buying a long-awaited item.
4. Develop a Habit of Regularly Checking Your Credit Report
As we’ve discussed in previous articles, your credit score impacts almost every facet of your life. But most importantly, a poor credit score deprives you of the cash you need to meet your financial goals. Therefore, you must develop a habit of regularly checking your credit report to ensure that your score is a true reflection of you.
According to a June 2021 Consumer Reports investigation, 34% of Americans found at least one error on their credit report. The most common errors were related to personal information, but 11% found account information errors. You’re entitled to one free credit report every year from each of the three reporting agencies. It’s an easy habit to adopt, it doesn’t cost you anything, and you could potentially save lots of money.
Adopting good money habits is one of the top secrets of people with good credit. By automating your savings and bill payments, looking for bargains, and paying yourself first, you’ll have less money going to debt reduction and more to your financial goals.