How to Develop Healthy Money Habits

Your money habits are your regular and repeated behaviours related to money. You know the ones – those little choices you make when you’re not really thinking about it. Like when you’re on autopilot on the way to the office or home from the gym and you swing by your favourite cafe because that’s what you always do.

Everyone has money habits, some are more helpful than others. And because you’re not always aware of them, you might not even consider whether they’re a helpful habit or not.

Money habits can be helpful or unhelpful.

These habits can really add up. While spending $5 on a barista-made coffee every day might not seem like much, think about that habit over a week, a month, a year, and suddenly you’re out of pocket hundreds, if not thousands of dollars. $5 per day, 5 days a week for 52 weeks a year is $1,300. 

The key to developing healthy money habits is:

1. Become aware of your habits – what choices are you making and when?

2. Consider if your habits are aligned with goals and values – what benefits do you get from the habit and are you happy about that?

3. Make intentional decisions with your money rather than impulsive ones – now that you’re aware of the habit, will you choose to continue it?

Ask yourself:

• Do these habits help me achieve what I want?

• What are the short vs long term impacts of these habits?

• Do I feel good about them?

• Are there other ways I’d rather be spending this money?

While money habits are personal, there are a few positive financial habits that are helpful for most of us. If you’d like to develop better money habits, consider how you manage your debt, how (and why) you save and what you spend your money on.

Work on introducing one ‘good’ habit at a time. Avoid going too hard too soon, start small to increase your chance of success.

Healthy spending habits

Consider trying some of these spending habits.

• Think about your bills – don’t just mindlessly pay your utility, insurance or other bills whenever they’re due. Take the time to review your bills and shop around for a better deal.

• Reduce non-essential spending – ask yourself if you really need it, every time you buy. If you’re unsure, give yourself a 24 hour buffer before you spend your money to think it over. 

• Cut down your regular expenses – shop on sale, buy in bulk, try new brands.

• Start a budget – work out where your money will go and stick to it.

• Cancel your subscriptions – review what you’re paying for and cancel the services you don’t use.

• Plan your bill payments – Know your due dates and put money aside so your bills don’t sneak up on you.

Better savings habits

Here’s a few ways to improve your saving habits.

• Pay yourself first – put aside your regular savings before you budget the rest of your money.

• Set up a savings account – protect your savings in a dedicated account.

• Save regularly – set up a regular transfer to your savings account.

• Plan for Emergencies – set up an emergency fund and make regular contributions to it. 

• Set up dedicated savings accounts – give each savings account a name so you know what you’re saving for, e.g holiday fund, home deposit, emergencies and bills

Everyone has an unhelpful money habit or two. Consider how you can turn them into helpful money habits. 

Here are some common unhelpful money habits to look out for:

• Spending on your credit card without a plan to pay it off.

• Not paying off your credit card and carrying large credit card debt month after month.

• Spending more money than you earn

• Impulse buying and emotional spending whether you can afford to or not.

• Signing up for subscriptions and memberships and not using them.

• Dining out too often. Could you eat in and save instead?

Healthy financial habits just make sense. They are practical lifestyle changes and practices to help you achieve your financial goals and have a better relationship with money. But they’re not one size fits all – the best money habits, saving habits and spending habits are the ones that work for you.

Developing good money habits can help you live more comfortably, stress less about your finances, overcome any debts, and be prepared for the future.

Does budgeting help improve money habits?

Budgeting can help you improve your money habits because it makes you think more about your financial choices and where your money is going. It also encourages you to track how you use your money, helping to keep you accountable.

What is an example of a healthy money habit?

Healthy and helpful money habits are practical lifestyle changes and practices that can help you achieve your financial goals and have a better relationship with money. Positive money habits can involve thinking about how you manage your debt, how (and why) you save and what you spend your money on. Helpful habits include cutting down on impulsive spending and regularly saving money.

How can I set a healthy money habit?

The key to developing healthy money habits is:

1. Become aware of your habits – what choices are you making and when?

2. Consider if they are aligned with goals and values – what benefits do you get from the habit and are you happy about that?

3. Make intentional decisions rather than impulsive actions – now that you’re aware of the habit, will you choose to continue it?

Creating better money habits starts by overhauling your unhelpful habits, e.g impulse buying, and swapping it for helpful ones.