I love the quote “our lives are just the sum of all of the decisions we have made up until this point.” Whether it was conscious or subconscious decision, our lives are a reflection of what we have determined to be necessary or unnecessary in respect to relationships, education, family, faith and even finances. What is interesting, however, is many of our decisions are merely a result of the habits we have formed, particularly when it comes to money.
For example, when I was trying to look into my spending patterns years ago, I realized that I am an extremist. I can either buy nothing for months or buy everything in one month; hence the reason why I do not go “window shopping”. It is darn near impossible for me to walk into a store “walk” around and not come out with a bag or five. So, in my attempt to break the habit of having to get everything, I now only go to the mall (or other shopping stores) when I have planned to purchase something (it’s in the budget). Why? Because I know my natural spending habits. If I see the dress, I am going to want the dress, plus the shoes, the earrings and the lipstick to match; therefore, if I do not budget money to spend on a new wardrobe, I cannot put myself in a situation where I KNOW I will be inclined to purchase a new wardrobe (which is also the reason why I put myself on an Amazon budget…the struggle is so real).
One of the books I recently began reading is called “The Power of Habit” and in it, the author discusses breaking old habits and creating new ones. And one of the ways we can all be successful in breaking bad habits, is to first recognize it is a “bad habit” and then to immediately replace it with a good one. Here are three money habits we can break and replace today that will allow us to inch our way closer to reaching our financial goals.
Don’t Spend the Change, Save it!
One of the money habits my husband implemented a few years ago was taking his loose change and putting it into a big jar. Instead of spending it, he saved it. This habit came in handy some years ago (soon after child #2) when “our money was funny and our change was strange” AND we were “in between blessings” (i.e. no money in the account and we still had five more days until payday). I remember we really needed cash and needed it quickly. I was starting to worry and my husband reminded me of the change jar he had. I quickly went and cashed in the change and thanked God because we were able to get what we needed and still had tons left over. I was grateful for all those pennies and nickels that he had saved because it helped us get out of a “pinch” quickly. And years later, my husband still saves his change because we never know when we will need it again. Save the Change!
Do not keep savings at the same bank as your checking, bank away.
I learned this concept the hard way. If I can easily transfer money “from” my checking “into” savings account, it means I can easily transfer money “from” my savings “into” my checking account. Yep, it’s a blessing and a curse; therefore, open a savings account at a bank far, far, far away from your checking account. Whether it is an online bank, a local bank or a credit union, most of the time, they will have better interest rates than a traditional bank anyway. And when you “bank away” do not, do not get a debit card for that account. A savings (or Emergency Fund) is there to save money, not spend. So, if I need money from my savings/Emergency Fund, then I have to physically walk into the bank to withdraw the money which means, I have to work harder to access it. Therefore, I am only going to get the funds when it is truly an “emergency” mainly because I am not taking three kids into the bank with me. Bank Away!
Use Cash (or debit card) and only use the credit card when you will pay it off fully every month.
Now, if you are a Dave Ramsey fan, he will say do not use credit cards at all…EVER! I say pay off all credit cards and if you are responsible, use it for things like travel. For example, we have one credit card and although I budget funds for travel, we use our credit card when we go on vacation and pay it off once we come back. This way, I do not have to use my debit card vacationing and risk identity theft (which has happened), but I can use the credit card to earn points and cash it in for gas cards to use when we travel (which is what we do all the time). If you have not mastered to concept of using the credit card and paying it off fully, then please, use debit cards (or cash) for all purchases because it is so easy to slip back into credit card debt if not careful (been there, done that). So use your debit, instead of credit!
Don’t let your money control you, control it AND tell it what to do.
Create a simple and I mean simple budget. Most people do not budget because they think it has to be this elaborate plan using new software with charts and graphs, when all you have to do is write down on a piece of paper that X bill will come out of this check, Y bill will come out of the other check, etc… Do not over complicate it! Do not overthink it! Just write it. When you write it, you are planning for the future instead of trying to correct the mistakes you have made in the past. Work towards the future, not from the past. A simple budget helps you do just that.
Eliminating bad money habits and replacing them with good ones is critical to moving us towards our goal…FINANCIAL FREEDOM! Let’s begin incorporating better financial habits on a daily basis, not just so we can live more or have more, but so our children can inherit these new habits. Let’s leave them good money habits to imitate, so they can leave their children better off financially than we left them.