We humans have some shocking habits when it comes to our finances. Creating new habits, big and small, can be life-changing.
Those new habits will be different for everyone. While I might need to learn to use my car less frequently, someone else might need to take a deep breath and learn to use the word "no" to friends and loved ones.
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Look for old habits that hold you back as well as new habits that could be adopted. If you find yourself justifying certain behaviours, they're probably the habits you need to replace.
Some examples of positive money habits include:
1. Automate your savings. Some people call this paying yourself first. Know what you plan to save each month and have it transferred to savings before you get your eager fingers on it. Then divvy up the rest. If you save first, come what may you have a better chance of meeting your goals.
2. Track spending. I'm not talking budgeting here. That's a given. Make a habit of keeping a regular diary of every cent you spend. The diary tells you a lot. When the Westpac Massey Financial Education and Research (Fin-Ed) Centre gave 50 families spending diaries a few years back, 48 responded to their results along the lines of "bloody hell, am I spending all that money", centre director Pushpa Wood said at the time.
3. Practice saying the word "no". Make sure you have a narrative ready too. For example: "No, you can't have that Elsa dress today, but if you save your pocket money for four weeks I'll match that money." Collect phrases such as "do I really need it" that help you change your behaviour. Tom Hartmann, managing editor at the Commission for Financial Capability (CFFC), added some goodies: "That doesn't work for me", or simply "yeah, nah". "The idea is to get playful with the way you say 'no'," he says. "It doesn't have to be this big emotional thing. Keep it light and move on."
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4. Create mindful habits. Mindfulness is a term from meditation about being in the present. Behaviours associated with mindfulness are perfect for personal finances. Hartmann has embraced the concept of late. "We have been looking to jump a little bit on the mindfulness wagon in sense that you are not associated with your thoughts. They are not you. You are not them. [Think] this doesn't make me who I am."
5. Go slow shopping or no shopping. Create habits that separate you from the things you desire to buy. Start by deleting shopping apps from your smartphone. If you can force yourself to wait until you're in front of a computer that gives you some breathing space. Slow shopping in person in the stores can be a better habit to return to. No shopping at all is surprisingly liberating.
6. Change the way you socialise. Or at least lessen the number of high-cost social events. An example may walking together instead of meeting at cafes. Have pot-luck dinners, or meet up for free events, of which there are many.
7. Pay your credit cards in full each month. Set your credit cards up so they're paid off in full automatically each month. And if you're spending more on your cards than you can pay off each month then work really hard on creating new habits to ensure you don't.
8. Save your bonus. It's human nature to blow a windfall. Be it your bonus, an inheritance, a refund, or other windfall don't spend that money. View it as a bonus for your savings.
9. Get your savings working quicker. Learn to invest small amounts regularly. That could be by adding extra money to your KiwiSaver or opening an account with the likes of Hatch, Sharesies, InvestNow and others that allow you to drip feed money into a wide variety of investments.
Small changes to your habits can help as well as the big ones. They lead to better financial outcomes, but also show you that it's possible to change.