The new year is upon us, and with that comes the inevitable New Years’ resolution list. According to Inc.com, saving money was one of the top five New Year’s resolutions, and we expect it will be a habit that many people will look to make again this year.
There’s no shortage of advice when it comes to habits, but generally the simpler the better. Read on for some simple yet effective money habits you can pick up in the new year to set you up for a happy, healthy, and debt free 2022. Creating strong financial habits doesn’t have to be hard, but it does take some changes in your mindset.
1. Understand Your “Why”
First, understand the “why” behind your financial habits. If you want a successful new year, you need to first realise why this is important for you. There are a lot of reasons you might want to turn your financial habits around. Here are some positive examples:
- You want to create a healthy relationship with money
- You want to build a rainy day savings fund
- You wish to model money management for your kids
- You want to focus on paying off debt
No matter your specific “why,” make sure this is something that resonates with you. When you have a strong foundation behind your financial habits, you’re more prepared to embrace change.
2. Create an Emergency Fund
Next, you need to create an emergency fund. This is one of the most important financial habits you can set for yourself. An emergency fund is a way to save for unexpected emergencies, like losing your job or needing an expensive home repair.
Not only will this give you a soft landing pad should things go south, but having an emergency fund will give you peace of mind. Aim to save at least three to six months’ worth of your salary in case of job loss, unexpected medical costs, house repairs or anything else life might throw your way. You won’t regret this one, and it’ll save you big someday.
3. Slow Down Before Purchasing
Now is also a great time to find a few tricks that get you in the habit of slowing down and thinking about your purchases. For example, anytime you’re undecided on a particular item, such as which pair of shoes, use it as a sign not to buy anything.
Other hacks include putting your wants onto a 30-day list, avoiding stores you know will tempt you or shopping with cash only, and leaving your cards at home. By being mindful about purchases, you avoid splurging on things you don’t really want or need.
4. Focus on Your Super
Another financial habit for 2022 is to focus on your Superfund. You can’t miss money you’ve never had, so start transferring extra money from your paycheck as soon as you get paid.
You should already receive 10% of your gross income as a guaranteed super contribution from your employer. However, contributing 0.5, 1.0 or even 1.5% more can have a huge impact on your future savings. If you can fit this into your budget, it’s money well spent. Your future self will thank you.
5. Fall in Love with Cooking
We all love dining out, but there are some great reasons to cook at home. Cooking at home is better for both your wallet and your health, so this one is truly a win/win. If you can view it as a pleasure rather than a chore, you’ll save big when it comes to your monthly budget.
You could easily save over $1,000 a year with a home cooked lunch. If you’re not sure where to begin, search some recipes online and see what gets your mouth watering. From there, invest in the right cooking gear to make your routine a piece of cake.
6. Put Payments on Cruise Control
Similarly, you want to avoid unnecessary fees and interest as much as possible. Set up automatic payments for all of your monthly bills to make paying bills a breeze. We still recommend checking that your payments are processed on time, but you’ll spend much less time doing this than you would paying your bills manually every month.
If possible, it’s a good idea to do the same thing with your savings account, making automatic transfers to your sub-savings accounts for things like holidays, education, and your emergency fund.
7. Pay Down Your Debts with Bonus Money
This is not as fun as spending your bonus money on a splurge item or a holiday, but it does mean you’ll have more money in the future. This can cover your expenses, or go towards your savings for that special treat.
Make sure that your tax refund, bonus, or any other windfalls go towards paying down your debts this year. Getting into the practice of putting extra money towards debt repayments is a strong financial habit.
8. Review Your Budget
When was the last time you took a look at your budget? Are you spending money on things that align with your personal values and goals? Question how you’re spending your money right now and start to prioritise what’s truly important to you.
For example, if you value spending time with friends and family, then instead of spending your money on clothes and accessories, prioritise spending your money on family dinners, vacations and experiences like watching movies with loved ones. When you review your budget, you see where your funds are going.
9. Shop for Deals on Essentials
Additionally, take a look around to see if you’re getting the best deal on your mortgage and insurance. Pricing schemes often change and this is a great way to save on a service you’re already paying for.
If you can get a better deal elsewhere, check to see if your current company is willing to match the price. If not, simply switch and watch the savings roll in. Now is also a great time to refinance while interest rates are low, so you might snag big savings long-term.
10. Track Your Progress
Lastly, get in the habit of tracking your money. This means tracking your income, expenses, spending, and even your debts as you pay them down. When you measure, you see results. Crossing off goals as you meet them is super motivating, and it shows you how far you’ve come.
When you track your progress, you’re rewarding yourself for these strong financial habits. Over time, these habits become second nature to create an easier, brighter financial future.
Go Back to the Basics
By focusing on the basics like spending less, saving more and paying down your debt, you’re sure to have a happier financial outlook this year and for many years to come. Starting new financial habits is for everyone, no matter what your budget looks like already.
If you’re ready to tackle your financial health this year and need an expert on your side, get in touch with us on 1300 368 322. We’ve been helping Australians get back to basics for over 15 years, and we can help you too.