One on hand we all know that there is far more to life than money. On the other hand, not having enough money can make your life miserable. Money can either be a tool that helps you build the life you want or it can be the source of a whole lot of stress.
I feel like I’ve been on both sides of the fence.
When I first got divorced money was a HUGE issue. I had been used to earning around $20,000/year which wasn’t a problem when I was married. However, after I got divorced making that money stretch was hard. I worked two jobs, tried to build online income, and saved an emergency fund.
The first year was really hard. But I made it work. I was able to keep my expenses in check and save a decent size emergency fund on a low income. And it all came down to creating habits that stuck.
Now I don’t even have to think about how to manage my money or what money is going to go where. My entire financial system is on autopilot.
I personally feel like this is a good place to be – to not have to think about budgeting, investing, debt repayment, or saving. It just happens on autopilot without even thinking about it.
These are the habits I’ve developed that have helped me the most.
# 1 – Not Buying a lot of Stuff
“You save 100% on the stuff that you don’t buy.”
That’s a completely true statement. I think we get caught up on trying to pinch pennies here and there or are tempted when we see sales like “BOGO Free” or “Save $15 when you spend $100” but the truth is, you’re not really saving anything if you buy stuff you don’t need.
I have a hard time buying things. I’ll put stuff in the shopping cart that I might need or that would be nice to have but I can never buy it! I walk around with it in my cart for five minutes and then I go put it back.
I’m not saying I never buy anything. I just don’t cave to impulse purchases much. When I buy something I’ve usually thought about it for a couple weeks before I pull the trigger.
# 2 – Saving Certain Income Streams
I LOVE that I have several income streams. It allows me to very easily designate different income streams to different savings goals.
For instance, freelance income goes to checking to pay bills while other income streams are divided up among my savings accounts.
Other than those one off expenses I don’t have to think about or touch my savings.
# 3 – Automation
This goes hand in hand with #2 but it works well. When your money is out of sight it’s out of mind. I have my Loyal3 investments, IRA contributions, and my kids’ college savings automatically saved for me every month.
I treat these expenses just like I would a regular bill. They happen automatically and so I account for them every month.
# 4 – Saving Whatever I Can
When I first started saving I saved whatever I could. I would sit down and pay bills and if I could only add $5 to savings then I would add $5 savings.
I think a big problem a lot of people have is thinking they don’t have enough to save. ANYTHING is enough to save.
If you develop the habit of saving whatever you possibly can then when you have access to more money you’ll still be saving whatever you possibly can and that amount will snowball.
What Habits Should you Develop First?
To truly make a habit stick you need to give it enough time to actually make it a habit. You have to keep repeating the action until you no longer need to think about it and your brain just automatically does it.
Since we’re all different I personally don’t think there’s a particular roadmap to follow. Instead you can try to:
Identify Your Biggest Weakness or Need. What is going to make your financial life vastly improve? Focus on that. Also, what area are you struggling in the most? Focus on that next.
Have Clear Goals. It’s hard to know what road to take if you don’t know where you’re going on the first place. Ignore what everyone says you should do and instead think about the things that are most important to you.
Repeat Until Automatic. Once you figure out what you need to do keep repeating until it becomes automatic. Depending on how often you need to repeat the action it could take anywhere from 30-90 days for the habit to develop. Keep repeating it until it you don’t even have to think about doing it.
Move on to the Next Habit: After you have on habit down move on to the next. Before you know it you won’t even have to think about money management other than checking your balances from time to time. You’ll develop the habits you need to have a lifetime of financial stability.