In this article: how you can create good money habits to achieve wealth and abundance, book recommendations on finance, and action steps you can start today to have a healthy relationship with money
If you stop to think about it, you can probably remember some of the first conversations you heard regarding money.
Suppose the conversations were negative, or you feel you weren’t taught enough about money at an early age. In that case, there tends to be a lot of negativity and confusion later in life regarding our finances.
The underpinnings of having financial wealth or lack thereof go far back into our early days of what we first learned and felt about finances.
Typically, we take good and bad money habits we have learned combined with our emotions regarding money and collectively turn those into our financial habits.
Therefore, not all of our financial habits are healthy ones. However, there are many ways to improve your financial habits, some of which you can start today.
Even simple, daily good money habits can alter the rest of your life regarding your bank account.
By the time you finish this article, you should have the tools to create a healthy money mindset, be on track to build wealth, and know the strategies you will need to create financial wellness.
Here are seven healthy money habits to start today:
1. Create A Money Mindset
To create wealth and abundance in life, we must begin with a positive financial mindset. To establish a healthy perspective regarding our finances, we have to evaluate how we think about our finances in the first place. The psychology around money plays a vital role in our emotions and financial decision-making.
Financial expert Suze Orman states that fear, shame, and anger are the most common emotions surrounding money. If you currently think about money grounded in those emotions, it may be preventing you from becoming a wealthy individual.
Many of our money mindset beliefs stem from when we are young. Our thoughts and emotions surrounding our money may be ingrained in our subconscious, and we may not even be aware of it. We are often a byproduct of the environment we grew up in, and this is no different when it comes to our financial well-being.
Even if our current mindset is based upon fear or lack of money, we can begin today cultivating a mindset that enables us to rethink our thoughts and emotions regarding our financial well-being.
One of the most important questions we need to stop and ask ourselves is, “How do I want to feel about money?” I’ll bet you want to feel happy, prosperous, stable, and in charge. As you read this article, consider those emotions.
To achieve those feelings, you must work hard to get your mindset there. Strive for supportive, healthy emotions and thoughts that will create wealth and abundance.
So, let’s take a look at the hard work we have to do to tap into to build a positive mindset and start creating wealth.
2. Build An Emergency Fund You Can Count On
An emergency fund is money set aside should you get put in a bind financially. When financial distress happens, this cash reserve can offer peace of mind. No matter how cautious we live our lives, there will come a time that we will have unforeseen financial circumstances such as medical bills, home repairs, or loss of income.
Most recently, many, if not all of us, were affected by the pandemic in one way or another financially. One survey revealed almost 40% of Americans faced emergency financial measures due to the coronavirus pandemic.
If you had to tap into your emergency fund, one of the first things you should do is take the necessary steps to rebuild the value of that account.
The amount needed in an emergency fund will vary dependent on your lifestyle. Many experts suggest 3-6 months of living expenses. However, throughout the last two years, given the pandemic, we have seen that the amount needed could be more to get us through difficult times.
In my opinion, it’s a realistic amount that will make you the most comfortable should numerous unexpected expenses arise. This financial habit will allow you to be in charge of your finances even during times of uncertainty.
3. Educate Yourself On Your Finances
You don’t have to know everything when it comes to your finances. Instead, you need to know how to find the resources to help you understand the foundation for building wealth. Since you are reading this article, it tells me you already are 😊
Taking control of your education with your finances is important, primarily because, in my opinion, we don’t learn enough about investing and financial literacy in school. One of my favorite quotes by Benjamin Franklin is, “An investment in knowledge pays the best interest.”
Here are a few book recommendations to help you take charge of your finances.
4. Pay Yourself First
If there is one thing you take away from reading this article, let it be this: pay yourself first. Some financial experts call this the golden rule.
Paying yourself first means before you book a vacation, buy a new purse, go out to a fancy dinner, renovate the kitchen, or fund anything else, you invest in yourself.
Investing in yourself means that a portion of your paycheck goes into your investment account or a savings account before your money goes anywhere else. It’s a reoccurring promise to yourself—Every. Single. Paycheck.
The simplest way to pay yourself first is to remove the temptation of having the money in the first place. That means before the check is even deposited into your bank checking account, it’s automated to go into your investment or savings account. You may even have the option to use the auto payroll deduction through your work to help you “set it and forget it.” Now you have seamlessly created the habit of saving.
When you learn to save even $50 a paycheck, this money habit will help pay off in the long run. Over time due to compound interest, this small financial habit can land you significant returns.
Some of you may be thinking I don’t have any extra money to pay myself first, but today I want to challenge you to find a way. The following money habit will help guide you there.
5. Be Mindful Of Everyday Purchases; Even The Minor Ones Add Up
We may not stop to think about smaller purchases, but even $10 here and there can add up. Did you get a manicure this month? Go to the movies? Magazine subscription? Go to a concert? Stop and grab a coffee and breakfast a few times this month? Buy a couple of overpriced sodas at a gas station?
If you are looking for ways to build back your emergency fund or have the funds to pay yourself first, start to hone in on minor purchases. Money can often be “hidden” in purchases we don’t realize. View your bank statement. Do you see a lot of little purchases here and there? What do they add up to be?
6. Live Below Your Means
Living below your means is perhaps one of the most overlooked habits to building financial success. As a former employee in the finance world, both in a retail bank and a private wealth management firm, I have seen firsthand how difficult it can be.
I honestly believe that what you spend can be just as important as what you make. I think this money habit is super important because I have seen a lot of people, even those that make six figures go broke.
How can someone that makes six figures go broke? You may be thinking. It’s all from the bad money habit of spending more than they earn. Most of us will succumb to the idealism that if we make more, then we are “allowed” to spend more, but this is where the habit of living below your means allows you to shine financially. Aim to make more but go into it knowing you will save more.
In All Your Worth: The Ultimate Lifetime Money Plan author Senator Elizabeth Warren talks about The 50/20/30 budget rule. This rule teaches us to utilize your after-tax income in this manner: use 50% on needs, 30% on wants, and 20% to your savings.
Remember, to put 20% into your savings, you can utilize healthy money habit number 4 above.
7. Trim Down Living Expenses When Necessary
If you’re spending more than you’re bringing in, it may be time to cut back or do away with unnecessary costs. When we are put in a financial bind, we need to focus on one crucial question— What is a financial priority?
It is important to keep in mind wants verse needs. Although a vehicle to get to our job is necessary, we can depend on used, not new. We can go without the latest fashion trends and pedicures, and in fact, we can learn to live without a lot if we put our mind to it.
Let me know which money habit resonated with you most 😊
If you found this post useful, others will too. Please share, so together, we can help more people.
Other reads you may enjoy:
12 Useful Ways To Boost Your Financial Wellness Before Year-End
12 Boss Babe Habits That Will Instantly Make You More Successful
6 Powerful Ways To Boost Your Happiness With Money
*Disclosure: I only recommend products I would use myself and all opinions expressed here are my own. This post may contain affiliate links that at no additional cost to you, I may earn a small commission. This helps keep my website up and running. I appreciate you and your support!