10 Good Money Habits You Should Adopt

If you’re like more than half the adult population, every year, you make a New Year’s resolution to get your finances in order.

That’s a great start, but unless you do things differently from what you’ve done up till now, why should anything change? But if you change your mindset and money habits, then your outcomes will change as well.

The path to financial independence is different for everyone. Some people get there via savvy business ownership, while others achieve financial freedom because of strategic investments in property or shares. Others rely on sheer hard work and a frugal lifestyle.

But while their paths may be different, most financially successful people share similar mindsets and habits, while making sure they don’t make silly mistakes that could damage their ability to reach their financial goals.

For many people though, their problem is not earning money, it’s keeping the money they have earned. The Rich Dad, Poor Dad author Robert Kiyosaki himself, said…

“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”


What are people doing wrong? Well… usually it’s their bad money habits that let them down.

What if you did things differently to most people?

Here are 10 good money habits you should adopt

if you’re not already.

  1. Spend less than what you earn

This key principle may seem obvious, but the reason many people are in debt is that they have difficulty adhering to it.  The bare truth is that if you’re spending more than you earn, you will never achieve your goal of financial freedom.

Making $100,000 a year and spending $105,000 on clothes, clutter, or toys you don’t need is going to send you broke no matter how much it makes you look rich.

The strategy is simply spending less than you earn – day after day, otherwise, you will be giving your hard-earned money to others for the rest of your life. The earlier you adopt this fundamental money habit the better. It is never too late to start.


  1. Start with paying better attention to your finances.

Many people ignore their spending and just hope it will work out. Hope is not a good budgeting strategy. It is amazing what you will discover about your spending when you keep track of every dollar going out the door! Take the time to invest in yourself by sitting down and going through your last three months (or more) worth of bank statements to get an idea of exactly where you’re spending your money. Once you start to add up just how much your daily coffee and croissant habit is costing you, you might understand why it’s taking so long to save for that overseas holiday.


  1. Budget like a Boss

If you want to take control of your money, you need to know where it’s going and plan in advance how to spend it. Financially savvy people know exactly where their money is going. They have funds set aside for all regular expenses as well as savings for unexpected ones and they adopt a life-long strategy to ensure they can invest their additional funds into income-earning assets.

Like a diet, it’s critical to establish a budget that is sustainable long term and choose a system that works for you.  I use a trusty old excel document to capture my spending plan, but you might prefer pen and paper, and there are plenty of free apps available that you might find easier to use. It doesn’t matter how you do it as long as your budget works for you.  For more information on How to Budget like a Boss, check out this blog.


  1. Faithfully follow your budget. 

It’s one thing to create a budget, but if you don’t have the discipline to put it into action, why bother? Financially successful people not only create a budget, but they also keep to it like money glue. Not keeping to a budget is a bit like driving your car without ever looking at the fuel tank – sooner or later you will run out of petrol! It can be tough at times, especially if you have friends that try to pressure you into spending your money. But if you’re honest about your financial choices and explain why you’d much rather spend your money on something else, then most people are overwhelmingly understanding. Who knows, you might even be the reason other people start to develop good money habits of their own.


  1. Set yourself financial goals and write them down.

Setting financial goals should be one of the first things you do when you begin your journey towards financial freedom. How much do you need to save for that dream holiday? How much debt do you want to pay off? When? You can say you want to make plans all you want, but until you do it, you are living in a fantasy. Make a plan and take action. Writing your financial goals down on paper will make it more real, and you’re more likely to stick to your budget when you can see the finish line.


  1. Pay off your debts as quickly as you can. 

Debt takes away your options and your financial freedom. The sooner you can get rid of it, the sooner you can start pursuing your dreams and living life on your own terms. Create a list of each debt, how much it is, and its current interest rate. Once you have your list completed, you can figure out a plan to pay off your debts — or drastically reduce them.


  1. Start saving (and investing) early

Saving money is a skill. Start small. If you wait to have left-over money to save or invest, you’ll never do it. If you wait till you’re earning more money, you’ll never do it. So, start saving a little bit of money each week. You don’t need a lot to develop a solid money-saving habit. $10 each week is still $10. The money will begin to add up over time, and when you have a decent chunk of savings in your account, you’ll thank yourself later.

Better still, if you automate your savings, it will be even more painless. I have my everyday account set up to transfer the same amount into a high-interest savings account on the day after payday every month. That way I never think twice about whether to save it or spend it.


  1. Never buy anything on impulse.

I don’t know how many times I’ve been idly scanning my social media feed and alighted on a shiny object that’s called out to me to own it. But more often than not, buying that shiny object has landed me in buyer’s regret. Do I really need that $50 mug even if it is handmade and the perfect shade of duck egg blue?  Those towering stilettoes for $600 might look good on an Instagram influencer, but let’s be honest, after 10 minutes they’ll probably cripple me.  A good money habit is to wait at least 24 hours before you actually hit pay on your shopping cart or hand your credit card over at the counter. After waiting 24 hours you might find you no longer have the urge to buy it, especially if it’s an impulse purchase you don’t actually need.


  1. Pay your bills on time, every time.

Financially savvy people understand the importance of paying their bills on time, every time. This includes their credit card bills. Don’t throw your money away on needless late fees and high-interest rates. Being consistently late with your payments or missing them altogether will also impact your credit score. A low credit score might result in higher interest rates when you next apply for a loan – costing you even more money.


  1. Have an emergency fund.

An emergency fund is just that, a stash of money set aside to cover the financial surprises that life throws your way. The reality is that you can’t predict everything.

It’s that money you have set aside for a rainy day, such as when the car breaks down, the dog gets sick or you have unexpected medical expenses. If you were to lose your job do you have enough savings to live on until you find a new one?  An emergency fund could be just the safety net you need if life was to throw something unexpected at you. However, the vast majority of people live from one paycheque to the next. If an unexpected expense arises, they are usually scrambling to come up with the funds or have to rely on their credit cards or high-interest personal loans to pay for it.

Financially savvy people have at least three to six months’ worth of living expenses put aside in their emergency fund. But if you’re just getting started, having even $1000 saved could get you out of many financial scrapes. You’ll rest easier at night knowing that you’re more likely to cope if and when bumps in the road come up.


A bonus money habit and one that might be harder than you’d think to adopt is to give yourself a splurge account. That’s right, it’s ok to spend money while you’re saving! Think of it as a reward as you work towards your financial goals by committing a regular (small) percentage of your budget towards buying things that make you happy. Including some fun in your budget will keep you on track and avoid a blow-out purchase that derails your financial plans.

I have a weakness for quality sheets and scented candles, what’s your splurge?


Note: The information in this article is general in nature as it has been prepared without taking account of your objectives, financial situation or needs.

B M Peachey

B M Peachey, has over 15 years of experience investing in property and the stock market, in both New Zealand and Australia. She has a post-graduate degree, with qualifications in Finance and Mortgage Broking and in Accounting and Bookkeeping. She is passionate about ensuring people have access to credible, reliable, and easy to understand information to help them get in control of the life they REALLY want to live.

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    Disclaimer: The information in this article is general in nature as it has been prepared without taking account of your specific objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.