Are you tired of feeling stressed and overwhelmed when it comes to managing your finances? If so, you’re not alone. Many people struggle with money management, but the good news is that there are simple steps you can take to achieve financial stability. Having healthy money habits can help you build a strong financial foundation and achieve financial freedom.
Managing finances can be a daunting task, especially for families and especially when you can barely make your basic living expenses. I have been there many times in the past and there is nothing worse than not being able to pay bills by their due dates, than worrying about where the next meal comes from or if you’re even going to have a place to live next month.
Building healthy money habits is the answer to those worries and to building a strong financial foundation for you and your family. They can help you solidify your finances even at a time when that may seem impossible to do.
Are Healthy Money Habits All About Spending Money?
I wish I could tell you that having healthy financial habits was simply all about your paycheck.
I can’t because it’s not.
Building a base of good financial habits actually has more to do with willpower and good mental health than it does the money itself. In fact, studies have shown time and time again that good mental health and good financial health are almost always linked to each other. If you are dealing with a compulsive spending addiction, depression, stress and even PTSD, you are more likely to subconsciously – or even consciously – sabotage your spending.
This can include things like not paying your bills, emotional or boredom shopping, maxing out credit cards, overdrafting your checking account and more. In the end, you may feel better in the long run, but most of the time, bad money habits only lead to ruined financial health and empty bank accounts.
Building better money habits, however, can actually help to relieve – at least somewhat – most of the issues I mentioned above simply because you changed your financial behavior and have the sense of accomplishment that comes with it.
How to Establish Good Money Habits to Avoid Financial Issues Later
If you’re looking to establish good money habits, It’s crucial that you pay attention to what you’re doing. It isn’t something you can say you’re going to do and then forget about.
Start by setting goals and visualizing what you want your future to be like. Write them down or use a goal setting sheet like THIS one.
It may sound silly, however, when things get really rough, having them to look back on will help you push through.
Communicate with Your Family
First and foremost, communicating with your family about your finances is crucial to establishing better money habits. It is essential to discuss your financial situation with your spouse and yes, even your children and involve them in the decision-making process.
This can help teach your children about financial responsibility and also help ensure that everyone is on the same page. It is also important to have regular discussions about your spending plan, your financial goals and progress to stay motivated and focused.
Establish a Budget
One of the essential healthy money habits is creating a budget. A budget is a financial plan that outlines how much money you have coming in and how much you plan to spend. It helps you keep track of your expenses and ensures that you do not overspend.
To create a budget, you need to list all your sources of income and expenses. This includes your rent or mortgage, utilities, food, transportation, and other bills. Once you have a clear understanding of your financial situation, you can allocate your money appropriately.
And if you want to manage payroll records, you can choose a template at Paystub.org, enter the required information, and download your desired document.
When creating your budget, you can use many different methods. There are apps, printable budget sheets like THESE, budget binders such as THESE and more. Use what works best for you.
Track Your Expenses
Tracking your expenses is another healthy money habit that families should adopt and is one that will also help you stick to your budget. It can be challenging to keep track of all your expenses, but it is crucial to do so. This will help you identify areas where you are overspending and make necessary adjustments to your budget.
There are several ways you can do this including apps, an old fashioned notebook and pen or an expense tracking worksheet like THIS.
Use Cash Back Apps
Using cash back apps such as Ibotta and Rakuten is another healthy money habit that families should adopt. If you have to spend money, there’s zero reason you should not try and get as much of it back as possible.
These apps offer cashback on purchases made at participating stores for everything from clothing to milk. All you have to do is download the app, select the store you want to shop at, and make your purchase using the app. The cashback earned can then be redeemed for gift cards or cash. This is an easy way to save money on everyday purchases and can add up quickly over time.
In addition, apps like Fetch will let you earn money for your receipts. There are quite a few of these apps out there, but THESE are the ones I personally use and can verify.
Live Below Your Means
Living below your means is an essential healthy money habit that families should adopt. This means spending less than you earn and avoiding unnecessary expenses. It can be challenging to resist the temptation to buy the latest gadgets or upgrade your car, but it is essential to live within your means. The key is to prioritize your spending and focus on what is important.
This can also apply to areas of your life you may not expect such as downsizing to save money or moving closer to your job so you save money on gasoline.
Save for Emergencies
Having an emergency fund is a crucial healthy money habit that families should adopt. Emergencies such as car repairs, medical bills, or unexpected job loss can happen at any time, and having a reserve fund can help you weather the storm. Experts recommend having at least three to six months’ worth of expenses in your emergency fund.
When you first start building healthy money habits, it may seem impossible to save money for unexpected expenses. However, keep in mind that any money saved is more than you had before. Start small and work up to a fully funded emergency fund.
Pay Off Debt
Paying off debt is another healthy money habit that families should adopt. Debt can be a significant burden and can prevent you from achieving your financial goals if your credit score is not high enough.
Start by creating a plan to pay off your debts, starting with the smallest ones first. Once that debt is paid off, roll that payment into the next largest. Continue until you are debt free. This is known as the debt snowball method and can help you gain momentum as you pay off each debt.
If your credit is already ruined, using a credit boosting service like SELF or getting a secured credit card like the Varo Believe card can help to raise it fairly quickly provided you stay on top of things.
Get a Month Ahead on Bills
Getting a month ahead on bills is another healthy money habit that families should adopt. This means having enough money in your account to cover your bills for the following month. It can provide peace of mind and help you avoid late fees and overdraft charges. This is also known as living on last month’s income.
It may seem impossible to do if you’re currently struggling, but it is possible. I wrote a detailed post HERE on how to do it even when you think you can’t.
Plan for Retirement
It is never too early to start planning for retirement. Saving for retirement is another healthy money habit that families should adopt. There are several retirement savings options available, including employer-sponsored 401(k) plans, individual retirement accounts (IRAs), and annuities.
Start by determining your retirement goals, how much you need to save, and which retirement savings options are best for you. It can be helpful to discuss things with a retirement advisor once you’re really ready to commit to planning for it.
Adopting healthy money habits is crucial for families to manage their finances effectively. By adopting these habits, families can reduce stress and worry about money, build a strong financial foundation, and ultimately achieve financial freedom. And financial freedom, my friends, is something we all deserve.