Top 10 Effective Personal Finance Habits

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Do you know the 10 most highly effective personal finance habits? Read on to find out!

A big income and fancy degree do not guarantee financial abundance. Effective money habits are an important part of achieving financial independence. Over time, your habits will ultimately determine your outcomes. Choose your habits wisely and watch your bank account grow. A few new, simple habits can create positive change.

Add these money habits to your financial life:

  1. Automatically transfer money to your savings or brokerage account. If left to our own devices, few of us would consistently put money into our savings account each month. Remove the temptation and responsibility. Save a portion of each paycheck without having to think about it.

     

  2. Review your financial goals each day. One of the most effective ways to save and invest effectively is to review your financial goals and keep them fresh in your mind. Don’t have any goals? Make a few.

     

  3. Only use a credit card in an emergency. Sure, there are cards that allow you to earn points toward good and services. But is the risk of running up your debt worth it? Pull out the debit card and save the credit card for emergencies.

     

  4. Pay your bills weekly. Set up a day and time each week to pay your bills. Try to pay all bills at least 10 days before they’re due. Holidays and weekends can prolong the amount of time it takes for online payments to post or for the mail to reach its final destination. Avoid waiting until the last minute, and late fees will be a thing of the past.

     

  5. Learn a little more each week. You might have had a single class on personal finance in high school. Any additional education on the topic will be your responsibility. Spend 30 minutes each week on a topic that will enhance your understanding of personal finance. A few ideas:
  • Managing debt
  • Investing
  • Retirement planning
  • Taxes
  • Diversification
  1. Check your bank accounts each day. Take a minute and review your account balances. Everyone has unexpectedly run out of money at one time or another. Never be surprised again.

     

  2. Live below your means. This single habit makes it easier to pay bills, save money, and avoid debt. Adopt a lifestyle that will allow you to save at least 15% of your paycheck and still avoid going into debt.

This where a budget really comes into play. With a household budget, you’ll be able to see how well you’re doing each month.

  1. Max out employer retirement accounts. If your employer offers a 401(k) plan, be sure to contribute enough to receive the maximum match amount.

     

  2. Eat at home. Every meal out costs a significant amount more than the same meal would cost at home. Plan your meals in advance and save money.

     

  3. Comparison shop. Comparison-shopping can save money and prevent wasteful purchases in the first place. By taking your time, you’ll have a better chance of finding the best price. You might also find that the urge to splurge has passed by the time you find the best deal. Shopping around can be half the fun.

How many of these habits do you currently have? Consider the idea that every money habit you have is either taking you closer to or further from your financial goals. Are your current habits enhancing your finances or harming them? Evaluate your habits and rate their effectiveness with a long-term perspective. Decide to adopt one new habit today.

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All content on this ​website was created and/or compiled by ​Natural Stress Relief Women. Unauthorized use and/or duplication of this material (including text and images) without express and written permission from this ​site’s author/owner is strictly prohibited.

Pass These Good Financial Management Habits on to Your Children!

Teach your children to adopt good financial management habits and to avoid these negative ones.

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Many parents complain that their children never listen to them.

While that may be true, there is good news.

The good news (and at the same time the bad news) is that your children are always watching.

If you ever tell your kids “Do as I say and not as I do” you know what I may.  Kids are less likely to do what you say, and MUCH more likely to do what they see you do!

The same principle applies when it comes to good financial management habits.

Your children may not listen to you, but they will quickly assimilate your habits and attitudes ( good or bad) regarding money. What habits are you demonstrating that could potentially harm their financial future?

When faced with uncertainty, it’s common to rely on experience. Before you know it, your kids  will be all grown up and may be off to college.  When they are confronted with financial situations, they’re going to imitate and mimic what they know. It’s up to you to set an example that will enhance their financial future.

Most likely, you have not given much thought to what you may be inadvertently teaching your kids about money. Today is a wonderful day to start.

4 Bad Financial habits you may be displaying that could make life more challenging for your kids:

  1.  You use your credit cards unwisely. In my opinion, this is the most devastating financial habit you may be inadvertently teaching your kids. True, credit cards can serve a purpose when you are in a financial jam, but the use of credit to purchase unnecessary items is one of the leading causes of financial stress and bankruptcy.  Don’t pass that negative financial habit on to your kids.
  2. You give in to impulse purchases. Children are already inherently spontaneous and impulsive.  That comes with being a kid.  Don’t let them witness a lack a financial control in you when it comes to money management. Your lack of control in spending money makes self-control even more elusive for your child in the future. Show your children that purchases should be decided ahead of a shopping trip….starting as early as when you sit down to plan your expenses to include in your budget. 
  3. You never stick to your budget.  Having a budget is a good start, but if you never stick to it, you are teaching your children bad financial habits. Sticking to your budget is another important way that you teach your kids financial self-control.  Involve your children in the budgeting process, and then remind them that a budget exists and that certain purchases can’t be made because of the budget. 
  4. You never make a clear distinction between wants and needs.  Teach your kids that needs are to be taken care of first. Wants are only considered after the critical items have been addressed.  Learning and understanding the difference between wants and needs is a valuable lesson your children need to grasp early on in their development.

Ask yourself if you are inadvertently displaying those 4 bad financial habits to your children. Remember: they may not listen to you, but they are always watching you!

While you make an effort to minimize or avoid showing your kids bad habits, make a point to develop and display good financial management habits.  These are the kinds of positive financial habits that can benefit you now while at the same time help your help your children to develop good habits from watching and imitating your good example.

Start displaying and sharing these 4 good financial management habits:

  1. Start saving consistently. Make this a main teaching point by saving money from each paycheck. Encourage your child to do the same with a portion of any money they earn or receive as a gift.  I give my 12-year old adopted niece chores and assignments to do and she can earn income when she completes them.  We then go to the bank together and she gets the “honor” of depositing the earnings to her savings account.  She gets excited each time she makes a deposit and sees her savings grow.  She is learning how to work and save money toward her financial goals. I also show her my savings and how I too am saving toward my financial goals. You can do the same thing with you kids. A robust savings account is an effective solution to many of life’s financial challenges.  It’s one of the valuable lessons you need to teach your kids from a young age.
  2. Start Paying bills on time. Your children know that you have to pay bills every month and they see those bills with the words “Past Due.” They also notice when you avoid the bill collectors that call day and night. And rest assured that they pay attention to the comments you make about the bill collectors and the financial bind you may be facing. What are your actions and comments teaching them?  Start doing your best to pay your bills on time and avoid the late fees. You’ll be setting a great example for your child and giving him a wonderful financial management heritage.
  3. Start teaching them that making great financial strides requires sacrifice. Let your children know that you’re not buying a new car because it’s more important to save for their college or retirement. Give them the option of making a small purchase at the sacrifice of something else. All financial decisions have positive and negative consequences.
  4. Start showing them the rewards of financial responsibility. No one wants to sacrifice all the time. The whole point of sacrificing is to enjoy the end result. Show your children that regularly saving money results in a vacation or a new television. Let your kids see and experience the positive outcome of good financial habits. My niece is saving towards her own vacation shopping funds.  She wants to buy a new cell phone and new clothes.  She’s already made her shopping list, and is eagerly looking forward to enjoying the rewards of her own financial responsibility. …getting everything on her list that she worked so hard and saved up for. 

Are you demonstrating good financial management habits to your children? Are you demonstrating poor habits?

You have a tremendous amount of influence over your child’s financial future. They’re likely to behave in a fashion similar to what they see in you.

Consider what you’re teaching your child each day with your money management habits.

If it’s not good, now is the time to change it and improve your money management skills.  If it’s good.  Congratulations.  You are raising future adults who will have good financial management habits!

Please Share Your Thoughts 

 In the comments below, share with us:

1. What steps are you taking to teach your children financial responsibility?
2. Do you have any tips to share that have worked well in your family?

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All content on this ​website was created and/or compiled by ​Natural Stress Relief Women. Unauthorized use and/or duplication of this material (including text and images) without express and written permission from this ​site’s author/owner is strictly prohibited.