Most people know the importance of setting good financial habits and practicing these habits to reach their short- and long-term life goals. However, a common mistake many people make when deciding to improve their financial lives is getting overly ambitious. They may try to follow too many habits and struggle to maintain these financial habits.
What’s the solution to this recurring issue? Tanya Peterson, vice president of brand with Freedom Financial Network, said to start with choosing just one or two habits. Here are seven financial habits you can set, and follow, each day to improve your overall financial health.
Make the most of the money you’re saving
There’s no reason to settle for average when it comes to your savings and doing so could set you back because it will put you on a slower path to your financial goals. Take the time to look at different options so you can be sure your savings account is the right one for your specific financial situation.
PenFed’s Premium Online Savings account* is a fantastic option to maximize your savings. The account features a 0% APY (Annual Percentage Yield) that is more than 10X the national average of 0.10%**, helping you grow your savings faster.
Like other PenFed products, this account also excels in the details. There are no monthly maintenance fees, you need just a $5 minimum to open an account, and you get free online transfers.
PenFed can offer such a high APY because it is a not-for-profit and owned by its members. Everyone is eligible to become a PenFed member and take part in the accompanying benefits like member discounts on a wide range of products and services from oil changes to home insurance.
*Federally Insured by NCUA. To receive any advertised product, you must become a member of PenFed Credit Union.
**The rate for our Premium Online Savings Account is over 10X the national average of 0.10% APY, based on the national average of savings accounts rates published in the FDIC Weekly National Rates and Rate Caps accurate as of July 18, 2022.
Pay Bills on Time
You might already be practicing this financial habit on a regular basis! Make bill payments on time. Peterson said you can do this by setting up a system. Consider using an app, online calendar or a paper file on your desk that you’ll use consistently to make timely bill payments.
Check Accounts Daily
How much do you have in checking and savings? Valerie Moses, senior relationship manager at Addition Financial, said to get into the habit of checking your accounts each day.
There are a few benefits to checking in daily. Moses said you’ll know how much money is available at all times and will be able to avoid overdrawing your accounts. It’s also an easy way to detect any fraud that may have taken place. If you believe something has happened, Moses said you can stop it in its tracks and mitigate its effects. It’s also easier than ever to keep an eye on our finances by using online and mobile banking apps.
Practice Habit Stacking
What is habit stacking and what does it have to do with personal finance? Alvin Carlos, financial planner at District Capital Management, said habit stacking is the practice of attaching a financial habit with an existing habit. This helps you to stay focused on the financial habit.
Carlos uses the example that you may check your finances after going for a weekend run or after having coffee on Saturday morning. He also recommends adding a recurring event in your calendar that allows you to review your finances once a month.
Create and Stick To a Budget
If you don’t already have a budget, it’s time to create one. If you do have a solid budget, continue to keep using it. Moses said that creating and sticking to a budget is one of the best financial habits anyone can implement.
Look For Small Ways To Save
Amid inflation and rising cost-of-living expenses, Peterson recommends looking for small ways to save money. Think washing clothes in cold water instead of hot water and creatively making a few meals using what you have in your pantry and refrigerator instead of running out to the store.
“Perhaps small things will seem insignificant, but getting in this habit develops smart spending,” Peterson said. “Small things will add up — and you might find you’re eating and living healthier, too.”
Set Financial Goals
Financial habits made to stick require purpose. Once you know which financial habits you’d like to start using and you’re able to follow through with these habits, Peterson recommends taking time and effort to determine how these habits will allow you to reach short- and long-term financial goals. This includes retiring at a certain age, going on vacation, having time to pursue a hobby or buying a new TV.
Moses said that keeping financial goals in mind also makes it easier to avoid impulse purchases and stick to your budget. Financial goals not only improve your daily life, but set you up for success in the future.
“Once you focus on what you want to do in life, creating the saving and spending habits that will get you there will become infinitely easier,” Peterson said.
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