Good money habits are not the same thing as good money decisions. Habits are something you do every single day without giving it an ounce of thought. They are what makes up who you are at the end of the day. You aren’t the product of anything but your daily choices that make up who you are.
Once you get used to employing these habits on a day to day basis, the whole world opens up to you. Once you master the process to producing results, the results will inevitably come to you. It’s not a matter of if, it’s a matter of when. Therefore, mastering the money habits below is crucial to bettering your financial life.
One of my friends earned almost double my income throughout his career because he has a spouse. Had he employed the habits below, I’m confident that he would have been a millionaire by now. However, he didn’t. While I believe that he is incredibly smart, I think he lacks the discipline it takes to be outrageously successful.
Which is completely fine. He’s OK with that and accepts it. Some people don’t mind getting there later than they realistically can. It’s all about your preferences and what you are willing to endure. I personally don’t mind sacrificing now to enjoy my life later. It’s not like I’m sacrificing two decades of my life to enjoy my 50’s.
I don’t mind sacrificing my early to mid 20’s in order to set me up by late 20’s and beyond. And I did so by employing the tactics below and pushing myself to be as the best as I possibly could be. I am very happy with the progress I’ve made so far, achieving a $400,000 net worth by the time that I’m 26.
9 Good Money Habits
The first great money habit you can do is to SLAP that social share button and post to your favorite social media! Too many people can have great financial lives yet they deliberately choose not to. it’s time to spread the word so that your friends can learn good money habits as well!
So with that said, let’s get into the meat of the matter.
1) Automating is the Best Money Habit Ever
The best money habit ever is automation. You don’t have to do anything except just let time pass while you sip Mai Tais by the couch. You just let the Autopay code do all of the work. Things that you should put in Autopay are your credit card bills, rent, cable, internet, phone, and debt.
All of my bills are on autopay so I don’t deal with any of that during the month. They just take the money straight from my bank account, which my direct deposit money replenishes by the time the bills are due, anyway. Additionally, my 401k investments are on autopilot as well that goes straight to the S&P 500.
When you set things to be done automatically, it leaves time and room in your head to pursue other interests. Preferably, interests that generate more money and/or save more money for you. Technology is like having your very own employee that you don’t even have to pay for, because it’s all set to be free. That’s great.
2) Learn Company Benefits Inside and Out
So many people overlook their company benefits as if they’re not worth that much. That’s a BIG mistake because they are literally missing out on free money. Money habits don’t just apply to your spending and saving, they apply to your company benefit programs as well. Companies give these free money out and it’s up to you to grab them.
Most 401ks have a matching program where you can put a % of your paycheck towards your retirement. Most companies have HSA programs that allow you to earn free money and/or will give you free money every year. The values range from $500 – $1,000. HSA money is the best money that you can have.
Review the health benefits that comes with the company as well. Health, dental, and vision insurance are the things that matter the most. Right now, I do not have vision insurance because it’s not really worth it for me to have it. I get my glasses from my home country and there’s no need for me to change prescriptions often.
it’s all up to you to figure out what works the best for you.
3) Consistently Live on Less
Money habits mean that you make it a habit to live on less. Don’t spend above your means, spend below it. When you have no excess money leftover for your desires and wants, that means you are not doing a good thing. Every month you should have at least 20% of your income leftover.
It’s time to do things like making meals at home, not eating out, and buying used technology that works just as well as new. Cooking and making meals at home is a great habit not just because it helps your wallet. But because you can better your skills of actually making food yourself and being independent.
When I used to cook, I bought a cookbook and used that to make my own meals. Then when my parents came to visit, I cooked for them and made food. It wasn’t glamorous but it was a lot better than just making a cheese and ham sandwich. I do want to get back into cooking sometime soon.
4) One of the Best Money Habits is to Invest
Make it one of your priority money habits to invest your money. Preferably in a broad market based index fund such as the S&P 500. Not investing advice, informational purposes only. When you consistently put your money to work, one day your money is enough for you to retire on.
Even single digit yearly returns is a phenomenal return. Right now, the vast majority of my net worth is invested in the stock market. I have an emergency fund and that’s about it as far as cash buffers go. I’m OK with that because my paycheck is more than enough to cover my living expenses and then some.
There are many asset classes that are popping up today, it’s not a good idea to miss out on it. It doesn’t just have to be in the stock market, it can be in cryptocurrency, real estate, Pokemon cards, art, and more. Whatever asset class it is, make sure it is a quality asset class and then order your money to make more money for you.
5) Keep Track of Your Money and Budget
Money habits mean that you have a budget set in place to track where your money goes and doesn’t go to. I religiously follow a $1,100 a month budget that I set for myself. These days, it’s a lot less than that. I live on approximately $800 per month now, excluding rent.
It includes my essential expenses and the pandemic made it easier to spend less money. It’s become socially acceptable, if not encouraged, to not go out during the weekends. Although it’s helped me save money, I would prefer a non-pandemic environment where we can go out and actually do stuff.
One day, that will happen. When that day comes is when my pent up demand will be unleashed. I don’t like having months where I only spent $500 for that month. It’s interesting that my expenses declined even when inflation hit 30 year highs. When there’s a will, there’s a way.
6) Practice Delayed Gratification
Delayed gratification is on top of every successful person’s money habits list. The majority didn’t become millionaires straight from the womb. They had to work decades and decades selling their time and craft in order to get there. Imagine waiting for at least a decade for the fruits of your labor to finally show.
Do you think that you can do it? Very few people can. In fact, the number is so low, that only about 7 – 8% of the American population can call themselves millionaires. Will you be them or will you be the 92 – 93% who can’t practice delayed gratification? It’s not complicated.
All you have to do is control your urges and wants. However, it’s not possible for the vast majority. They have to spend money on solving their immediate wants and needs. If you want to be different from the 93%, then you have to do different things from the 93%. What will you choose to do?
7) Make it a Money Habit to Stash Away Additional Income
Additional income doesn’t just include side hustle money. It includes bonuses and raises as well. There are many things that you can do to earn additional side income. Things like cash back websites, credit card rewards, dividends, and more add up to your bottom line to add to your net worth by the end.
Whenever I get my $10,000 bonus at the bonus season, I don’t think about what I want to spend on. I think about what I want to invest on. One of my former banker friends asked, “what would you spend on? I’m going to spend money on a nice suit”. I already have 3 good suits for me to pick from. No need to add more.
It’s a great thing when you spend the same amount of money while you increase your income and inflation is positive. You’re winning both ways. There are always ways for you to cut down on your expenses. These days, I actually spend less money than I used to four years ago. Even in an inflationary environment.
All the while making more than double my income. Good money habits sure do make me feel good.
8) Take Advantage of Credit Card Rewards
Obviously, if you are not paying off your credit card balance each month and/or you don’t know how to properly use credit cards, don’t use them. However, credit cards are a great way for you to spend money on things that you were going to spend money on anyway. That gives you additional money as compared to not using a credit card.
Many opponents of credit cards don’t believe that you actually will only spend money on the things you were going to spend money on anyway. It’s up to you to decide whether or not you will actually follow through with the promise of only using credit cards to buy things you were going to buy anyway.
Money habits follow on to all aspects of personal finance, not just in saving and investing. I currently have $1,500 worth of credit card rewards money that I haven’t withdrawn. That’s over 1.5 years of spending. I know I’ll withdraw it eventually, which will go great to paying down rent. One month’s free rent sounds great to me.
9) Consistently Comparison Shop
These days, technology is everywhere ready and willing to help you save money. Good money habits mean that you are consistently comparison shopping. It’s less likely that the first place you visit has the best prices available. Other shops are probably selling the exact same thing at a better price.
These days, I purchase gift cards on my rewards credit card to buy products at a discount while being signed up for their rewards program. Compared to the average shopper, I probably pay 20 – 30% less than them. For products of the exact same quality.
I refuse to pay more than I have to. Retail price is more of a suggested price rather than a set amount. There’s always ways for you to get around it. You can haggle, ask for a discount, or any other things to get you that discount. Consistently comparison shop and make one company offer you a better deal than another.
Money Habits Make or Break Your Life
Your financial life currently is not the result of choices you made yesterday. It’s the result of your money habits you employed over years and years, if not decades. Therefore, when it’s that crucial and that important, you need to tend to it and make sure you are making the right choices.
The results don’t show up after a day, week, or even a month. It shows up after years and years. That’s when you finally know who made the right choices and who made the wrong choices. It’s a slippery slope where one good decision snowballs into great decisions and one bad decision snowballs into bad decisions.
These money habits helped me grow my net worth to $400,000 by the age of 26. That is a top 1% net worth for my age group that 99% of people cannot talk about having. Will it help you get to the exact same place to be in the top 1%? Only you can be the decider of that. It’s completely up to you.
It’s your life. Do you want to spend the rest of your life being like the top 99% or do you want to spend the rest of your life being the top 1%? It’s within the confines of your choices that you make that is going to make the difference. No one is stopping you but yourself.
Then by the end of a decade you can either thank or blame your past self for your own choices. I just know that I want to be thankful for my past self instead of regretting at my past self for not making these decisions. If all I have to sacrifice is 6 – 8 years in order to be set up for life, then so be it.
9 Good Money Habits List:
- Automating savings is the best money habit ever
- Learn company benefits inside and out
- Consistently live on less
- One of the best money habits is to invest
- Keep track of your money and budget
- Practice delayed gratification
- Make it a money habit to stash away side income
- Take advantage of credit card rewards
- Consistently comparison shop
