5 Easy Financial Habits That Experts Swear By

Personal finance isn’t as complicated as it seems. Once you get into the practice of good money management habits, it becomes second nature to use these habits to reach your short- and long-term financial goals.

What are some of the easiest financial habits that anyone can start developing now? Let’s take a look at the most popular and expert-approved financial habits that are easy to get the hang of and can set you up for financial freedom.

From building an emergency fund to funding your retirement, it’s a good idea to get into the habit of automating as many of your financial decisions as possible. Robert R. Johnson — Ph.D., CFA and professor of finance, Heider College of Business, Creighton University — said automation is one of the best ways to save money. 

Johnson uses the example of having a specific dollar amount or salary percentage taken out of each paycheck and put directly into an investment fund, like a low-cost index fund. Regardless of whether stocks are rising, falling or treading water, you are putting money into the market. In the long run, the habit of automation also allows individuals to practice dollar-cost averaging and build significant wealth.

“The biggest advantage of automatic plans are the behavioral underpinnings of the plans,” said Johnson. Essentially, once you are enrolled in an automatic savings plan you are likely to stay enrolled in it.

If you work for a company that offers an employer-sponsored retirement plan, like a 401(k), participate in it as soon as you are eligible. Automate contributions and contribute enough to earn a company match.

“Arguably, the most important financial decision anyone makes in their life is the decision to participate in an employer-sponsored retirement plan,” said Johnson. “Perhaps the worst financial mistake anyone can make is turning down free money.”

Participating in your company 401(k) plan has more benefits than accruing money for retirement. Maxing out your 401(k) helps reduce your tax bill, too.

How often do we fully read financial documents, especially our credit card statements? Danielle Miura, CFP and founder of Spark Financials, recommends getting into the habit of reading your credit card statement each month.

By checking your monthly credit card statement, you can look for billing discrepancies, evaluate your spending and check your rewards. If you don’t already have your credit card payments automated, use this time to schedule your card payment.

Insurance policies are another document that require careful review, but don’t often receive the proper check-in.

Miura recommends getting into the habit of checking your insurance policies on a yearly basis. Doing so will ensure you have enough coverage and compare your current price against competitors. With many fluctuations to home and auto insurance prices, checking these policies yearly makes sure you have the best price possible for the coverage you need.

Whether you use your smartphone app or log in to your account on your laptop or desktop computer, one of the easiest financial habits you can do each day is checking your accounts. This is a great tip we featured from Valerie Moses, senior relationship manager at Addition Financial, in a previous article about financial habits that improve your everyday life.

Checking in on your accounts — like checking, savings and retirement — allows you to see how much money is available. Similar to reading a credit card statement, getting into the habit of regularly checking your accounts allows you to detect any signs of fraud and prevent it before it happens or mitigate its effects.

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