ESSENTIAL

MONEY HABITSEVERYONE NEEDS

SPEND LESS THAN YOU EARN

It seems so simple yet many people struggle with this constantly. This habit can only be developed by having a spending plan that can be followed and by not increasing your spending with every raise.

PAY YOURSELF FIRST

Saving first, usually through direct deposit into a savings account with each paycheck, is really the essence of this habit. Saving first and often is a foundational key not only for financial wellness but for building long term wealth.

MAINTAIN AN EMERGENCY FUND

Your ability to withstand an unforeseen financial crisis that could be caused by medical expenses or loss of income is completely dependent on building and maintaining an emergency fund of at least six and up to twelve months of expenses. It is also important not to make every money shortfall an emergency.

SAVE FOR THE UNEXPECTED

Extra costs are part of everyday life. Saving for these extra expenses is the only way to avoid dipping into your true emergency fund. If you can save $500 to $1,000 for every person in your household and for each pet, you will most likely be able to cover any unexpected expense that might be on the horizon.

TRACK YOUR MONEY

Tracking your spending is the only way that you can truly understand your financial situation. Without this knowledge, you won’t be able to avoid potential problems or have any insights into how you might solve the financial issues that arise. This knowledge will also help you make better financial choices.

Every person’s situation is different and yet no matter the amount of money one makes their financial habits have the greatest impact on their financial well-being. If you can develop essential money habits your chances of avoiding financial distress will be greatly enhanced.

ESSENTIAL MONEY HABITS EVERYONE NEEDS (continued)

HAVE FINANCIAL PROTECTION

As your life evolves, make certain you have the appropriate insurance for all your needs. This includes health, life, car, home or renters insurance and even long term care insurance. It is never too early to find the coverage that provides a financial backstop for many of life’s unfortunate events.

GET THE MAXIMUM 401K EMPLOYER MATCH

If you don’t contribute enough to your employer’s 401k program to receive the maximum match you are leaving free money on the table. There is no way to make up this lost opportunity that doesn’t require you to save more as you get older.

SET FINANCIAL GOALS

You should have both short and long term goals and they should be updated at least annually. Part of this process includes listing the steps you need to take to achieve your goals and a regular review of your goal progress. Without goals, there is a tendency to be stuck in financial mediocrity.

PAY YOUR BILLS ON TIME

Paying your bills late can cost you hundreds of dollars in late fees and if you pay loans or credit cards late it can impact your credit score. Automate your payments, use bill pay or set up electronic reminders so that you are never late. The impact for paying late can be significant and long term.

NEVER STOP SAVING FOR RETIREMENT

Regardless of your other savings activities, start saving early for your retirement and continue growing your retirement savings through your entire life. Retirement should take a priority over education savings. Make cuts elsewhere so you can avoid lowering your retirement savings contribution.

CORRECT BAD FINANCIAL HABITS

If you are an impulse buyer, try to keep up with your neighbors, spend too much when out with friends or any other habit that is detrimental to your financial situation…own the problem and work to correct it. All of the planning and budgeting you do will be wasted if you can’t control these bad money behaviors.

ESSENTIAL MONEY HABITS EVERYONE NEEDS (continued)

USE COUPONS AND DISCOUNTS

Take the time to sign up for loyalty cards, reward programs and look for coupons. Also look for discounts and coupons before making any purchase. There are significant savings available for almost all of life’s everyday spending activities. Most people can save $75 to $200 per month just using loyalty cards, coupons and rewards that are readily available.

SHOP WITH A LIST

Whether it is grocery shopping or gift shopping, always have a list of what you want to buy. For gift shopping, make sure your list includes how much you want to spend. Shopping excursions can’t become an excuse to overspend. Overspending on daily shopping activities is one of the biggest culprits of spending more than you earn.

FIND THE VALUE IN EVERY PURCHASE

Don’t just consider what you are spending on any particular item but also consider what value it brings to you. Do you really need a designer handbag that will take 8 hours of your pay to purchase and that you will only use occasionally? Understanding the cost/benefit or value is important in making smart financial decisions.

BE DELIBERATE WITH FINANCIAL TRANSACTIONS

From buying a new chair to buying a new house and everything in between, be deliberate in your buying process. Live with your decision for at least 24 hours before making the commitment to the transaction. If it is a larger transaction, make sure your budgeting assumptions are correct. This time often helps ensure the decision makes sense financially.

BUILD A TEAM

As your financial circumstances change look for individuals who can help you navigate the more complex financial situations. Your team might include: an estate attorney, accountant, financial advisor, insurance agent maybe even a mortgage loan officer. It is important to understand any financial move you make and this team will provide the knowledge that you will need.