4 Basic Financial Habits That Will Transform Your Life

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We all have them, good and bad. You know, those things called habits. Many of us have daily habits and routines to keep things running smoothly in our lives and propel us forward toward reaching our goals. You may have some habits or routines and not even realize it! We will walk through some financial habits today that can truly transform your overall money picture!

First, let’s talk about routines in general. Whether or not we follow a detailed, written out routine or whether we roll out of bed in the morning and wing it, most likely you DO have a morning routine—the things you do every single morning to get ready for the day. 

You also have a work and/or home routine for your meals. It could be bringing and eating leftovers from home, swinging through the drive-through, or throwing something together out of your fridge last-minute.

If you have smaller kids, you have some type of evening routine—and the one night you decide to change it up, they are thrown off completely and may take FOREVER to go to bed! We all have certain routines that we pretty much follow no matter what.

So what about your financial habits and routines? Most of us probably have some sort of a system to pay our bills. Maybe we auto-draft some money into a savings account every month. And money is taken out of each paycheck to go into a retirement plan. These are all common financial routines, and it is great to have these things in place.

But do we need some weekly and monthly—or even daily—habits to make our money go where we want it and do what we want it to do?

I have found that when I keep up with these basic financial habits more regularly, working on managing my money is way less stressful and even less time-consuming.

Here are the four basic financial habits that will make the biggest difference in your life. 

1. Track your expenses.

When I keep up with this DAILY, it is the least stressful.  And, if we’re being honest, tracking an expense immediately after purchase is best! It’s much easier to remember what I spent money on right after purchase and/or at a minimum that day as opposed to waiting a week or even longer–and then trying to remember what I purchased at Target—was it groceries, clothes, home decor, or diapers (or some of each)?!

I know, I know, it’s not always convenient to track daily–especially when you are first working on this habit. In that case, tracking expenses weekly would be better than biweekly or monthly, of course.

Decide the best time for you to sit down and log receipts or look at transactions on your banking website or app. An app works wonders to track immediately after purchase! Set an alarm to remind you to keep everything updated, whether it be daily or weekly.

My expense tracking sheet includes five headings: Date, Store/Place, Amount, Budget/Expense Category, Account (Checking, Credit Card, etc.)

**By the way, if you’re needing ONE place to keep up with your monthly bills and payments, you can download the Penny Steward Mama Bill Trackers by signing up for the newsletter! Also, at the end of every month on the Penny Steward Mama  Facebook Page, we host a budget challenge to jump into the next month! Be sure to join us for the challenge!**

Expense Tracking/Budget Apps

In addition to paper tracking, I use an online app called Mvelopes (thanks to a lifetime membership purchased years ago), so I try to add my transactions to that immediately after the purchase. Then when the purchase clears my bank or credit card account, I just “match” it. This way I don’t have to research a couple days later to figure out what that what that money was spent on.

Besides Mvelopes, two other budget and expense tracking apps that you could try are EveryDollar or YNAB (You Need a Budget).  EveryDollar is free without linking to your bank, but you would pay monthly for bank linkage. YNAB has a free trial then a monthly fee. Both are great!

2) Compare your tracked expenses to your pre-determined budget.

You can do this on paper or with the budget app you are using. (If you need to learn how to make your budget in the first place,  join the next Penny Steward Mama Budget Challenge! It’s hosted once a month!!)

If on paper, keep a tally of your expenses in a certain category then look at your budgeted amount for that category. Are you staying under that budgeted amount? 

If on your app, the app will subtract it for you so you can see at all times how much money you have left to spend in a certain category. This is what I love about the app option! And your numbers will be all the more accurate if you enter them immediately in real-time.

3) Review your monthly budget at the end of the month to see how you did.

I make sure all expenses are updated through the end of the month and see how it compared to our budgeted amounts. Unfortunately, we are usually negative in a couple categories–commonly groceries and eating out. This means I have to take money out of another category (or categories) to make up the difference.

Well, how did you do?

Are you spending more or less than you budgeted for the month and what are you spending it on? How can the results of this month’s budget help you adjust for next month?

4) Adjust the current monthly budget for the next month.

Now is the fun part! Yeah, I know, personal finance nerd talking here. But, seriously, you get to decide where your money will go the next month! Don’t worry if it all seems to be going to bills before you even have control over it. This is the case for many people! Just the fact that you are reading this article, thinking about your money, and figuring out ways to implement changes means that you are on course to turn your finances around. Way to go!

So pull out another sheet of paper or open up your budgeting app. Look at your expenses you have been tracking. Also look at your calendar for the next month to see if you need to plan ahead for something specific coming up. Which budgeting amounts can remain about the same, which need to go up, and which can go down? Get creative! Think about what you may be able to change and improve as you are reviewing these numbers.  

And there you go! Those are the four basic financial habits that will truly transform your life once you start implementing them. You will begin to see more and more money in your bank account each month and less and less zeros behind the amount of debt you have. One day, you will wake up and realize your money is doing what you want it to do and going where you want it to go! 

Now I realize if you are just starting to get your finances back under control, then doing all of these at once will seem very daunting! Don’t let that get you! Don’t quit before you even start.

Tips For These Personal Finance Habits to Stick

Start small and progress slowly. Begin with the first habit only, which is just tracking your expenses. Work on writing them down or adding them to your app immediately after spending. This will be the most efficient way, but I understand it is not always feasible. Therefore, another idea is to set an alarm for either daily or weekly tracking. When that alarm goes off, no excuses! Sit down and go through all your receipts and add them to your expense tracking log or app. If you don’t think you have all your receipts, pull up your online bank account and write down/add each transaction from there.

Plan ahead.  This allows you to avoid feeling guilty about not doing it today, and you can mentally prepare for the time you will take to do it. Look at your calendar for the day and week. Decide which day you may have a few minutes of time to sit down and do this. Put it in your calendar with a time attachment. Treat it like any other appointment.

I use a paper planner along with my digital planner, Cozi, to keep my schedule organized. If you need a paper planner to help with budgeting, as well as your weekly and daily schedule, you can see what I use in the post My Secret to Organizing and Managing a Crazy, Busy Life.

Find an accountability or support partner. Ask a friend who may be working on her finances as well. I have a close friend from college that practices the majority of these habits and we collaborate often.

She is so encouraging to make me sit down and focus on it even when I don’t want to. It’s also good to realize I’m not the only one that goes over budget and even totally fails at budgeting some months! If you want some online accountability, check out the Penny Steward Mama Accountability private group on Facebook.

In short, you now know the four most basic financial habits to transform your life! After you have tracked your expenses for a month or a few weeks, work through the budgeting post and create your budget. Continue tracking every expense while you do this. Once your budget is set, compare your expenses to what you have budgeted. When the month ends, use it as a check point to see how you’re doing. Check your progress, pull from other categories if needed, and if you’re coming up short, then really dig in and see what is causing that. And finally, reset your budget for the next month, using the numbers and corrections from last month as a guide. 

What financial habits or routines do you already have in place? What has worked for you and what hasn’t? Do you plan to begin any of these basic financial habits today?

As always, steward intentionally.

Heather

P.S. If these were TOO basic for you, great!  In that case, you need to know what do do next with your money, so check out the step-by-step plan to financial success. It will give you your next action step no matter where you are in your financial journey!

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