If you want to be financially in a better place this year, you’ll need to develop smart money habits.
To name some, you should consider making a budget, automating your savings, and educating yourself financially.
This article covers the top 15 smart money habits that can make the most impact on your finances, including why they’re effective and how you can start applying them to your life.
Table of Contents Show
Summary of The Top 15 Smart Money Habits
| Financial Tips | Summary |
| Set Goals, Make a Budget | Assess your income, set short/medium/long-term goals, and track spending with tools like Mint or spreadsheets. |
| Automate Savings and Investing | Use pre-authorized deposits and apps like Moka or Wealthsimple Invest for automated savings and investments. |
| Automate Bill Payments | Avoid late fees and maintain good credit with automated bill payments. Consider apps like Trim Financial Manager (U.S.). |
| Shop Around | Compare prices and check out reviews to always get the best deals when shopping. |
| Pay Off High-Interest Debt | Prioritize paying off high-interest credit card debt for financial flexibility. |
| Start a Side Gig | Increase income through a side business or legitimate side gigs. |
| Educate Yourself…Financially | Enhance financial literacy and read books like “The Little Book of Common Sense Investing.” |
| Check Your Investments | Regularly check and rebalance investments to minimize fees. |
| Ask For More | Ask more from yourself and others. For example, you can negotiate for a higher salary or seek opportunities recognizing your skills. |
| Review Bank Statements Regularly | Monitor for irregularities and see how you can adjust spending habits accordingly. |
| Work on Your Credit Score | Maintain a good credit history for better access to lower interest rates. |
| Talk About Money | Align family towards common financial goals through open discussions. |
| Stop Living to Impress Others | Live within your means and avoid financial stress by resisting unnecessary spending. |
| Don’t Pinch Pennies While Losing $$$ | Practice frugal living sensibly by balancing quality and cost-effectiveness. Sometimes, cheaper doesn’t always mean better. |
| Don’t Wait to Win the Lottery | Plan and take proactive steps to improve finances and avoid relying on luck. |
Set Financial Goals and Make a Budget
It may sound simple, but this is the starting point if you want financial success. Take a close look at your income and expenses. This gives you a picture of where your finances are at.
Set specific financial goals for the short, medium, and long term, and start working towards reaching those goals one after the other.
Track your spending using free apps like Mint, KOHO, YNAB, or just use a simple spreadsheet. Have a monthly budget – nothing complicated, keep it simple! Your budget is the key to meeting your goals.
If you fail to plan, you are planning to fail. – Benjamin Franklin
Automate Your Savings and Investing
After budgeting and documenting your savings/investing goals, it is time to make it happen automatically.
Set up your savings/investing accounts to automatically withdraw funds from your chequing account i.e. pre-authorized deposits. The chances of you following through with your savings/investing plans are significantly increased with this approach.
There are some great apps that automatically save/invest your spare change. Canadian residents cansign up for Wealthsimple Invest. U.S. residents can sign up for theAcorns app.
Some options for high-interest savings: Open an EQ Bank Saving Account(Canada) or Neo Financial Money Account (Canada) to earn high interest on your savings.
If you are in the United States, take a look at what’s available through SaveBetter or online banks such as Discover, Ally, and Synchrony.
Automate Your Bill Payments
As with your savings and investing, consider automating your bill payments. This will help you to pay your bills on time and avoid late payment fees that can derail your savings efforts this year.
Paying your bills on time will also ensure you do not damage your credit score.
While ensuring you pay your bills on time, you can also get some significant money back when you use a FREE app like the Trim Financial Manager (U.S.).
Shop Around
Don’t get used to paying the “sticker price.” And, this is not only for high-priced purchases like a car.
Get used to doing comparison shopping and look around for the best deals – including on groceries, car and home insurance, mortgage rates, etc.
Comparing prices and checking out reviews have never been easier to do, and you’ll be surprised how much you can save by deploying this simple strategy.
The cost savings will add to your bottom line by lowering your expenses. Make sure to earn cash back when you shop!
Pay Off High-Interest Debt
Paying just the minimum amount does not cut it with credit card debt – it’s like digging yourself into a bottomless hole.
With the high interest rates charged on credit card debt, you should be paying it off first before trying to save or invest.
When your credit card debt is defeated, you will have more funds to put towards boosting your finances.
Start a Side Gig
While you can try cutting down your expenses, you can only go so far.
Another strategy for increasing your savings and improving your finances is to increase your income by starting a side business and increasing your sources of income.
Get out of your comfort zone and engage your entrepreneurial abilities this year. There are many legit side gigs you can use to generate extra income.
Related reading:
- 13 Side Hustles To Earn Income on the Side
- Work From Home Jobs in Canada
- Home-Based Businesses for Stay at Home Moms
- Creative Ways to Make Money
Educate Yourself…Financially
Knowledge is power.
To boost your finances, you need to be financially literate and understand how money works. And, not just financial literature – read widely, and you will be the better for it.
Educating yourself may also include learning new skills that increase your earning power.
Some books you can add to your financial reading for the year are:
- The Little Book of Common Sense Investing by John Bogle
- Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School by Andrew Hallam
- The Wealthy Barber Returns by David Chilton
- Against the Gods: The Remarkable Story of Risk by Peter Bernstein
- Winning the Loser’s Game: Timeless Strategies for Successful Investing by Charles Ellis
An investment in knowledge pays the best interest. – Benjamin Franklin.
Check Your Investments
Don’t just forget about your investments; check in once in a while.
If you are a passive index investor, you may need to re-balance your portfolio once or twice every year to ensure your asset allocations are still intact.
You should also be renewing your investments for fees. Minimizing the fees you are paying for managing your investment can significantly increase your returns.
DIY investors can save money by buying ETFs on commission-free brokerages like Wealthsimple Trade and Questrade.
If you would invest on autopilot while saving on fees and maximizing your returns, consider using the services of a robo-advisor.
Wealthsimple is the most popular robo-advisors in Canada. You get a cash bonus when you open an account using this link.
Ask For More
Yes, become an “Oliver Twist,” and ask for more!
To start, ask for more from yourself – you can probably do better in many facets of your life. Start small; like they say: “Rome was not built in a day.”
And, if you are already doing more, consider asking your boss for more (if you believe you deserve it). Negotiating your salary can be a smart move if you are an asset.
I came to understand the power of “asking” a few years ago when I got a $10,000 plus salary raise after I asked for a promotion at the conclusion of a 6-month anniversary performance review!
You can also “ask for more” by simply offering your skills to another company that better appreciates your talents and is willing to pay you more.
Review Your Bank Statements Regularly
In a world where fraudsters are just a click away, it’s important to check your bank statements for any odd activity.
At the same time, this will give you a good idea of where your money is going and if you need to make adjustments.
As an aside, you may also note that you need to call and cancel that magazine subscription again!
Work on Your Credit Score
Good credit history and a high credit score mean you can access credit at much lower interest rates.
Check your credit score routinely not only to see where you are at but also to detect any fraudulent activity, including identity theft.
You can now check your credit score and report for free in Canada.
Related: 4 Ways To Get Your Free Credit Score.
Talk About Money
Discuss finances with your spouse and children. It will be easier to achieve your financial aspirations when everyone in the family is on the same page with regard to financial goals, budgets, and plans.
Look for opportunities to talk about money and where you stand as a family. Talk about it at the dinner table, as you drive around town… whenever you have a chance.
When you are in a good place financially, the entire family benefits.
Stop Living to Impress Others
If you want to “keep up with the Joneses,” you had better be able to afford it and be willing to live with the additional stress it will bring.
While you should aim to do well for yourself and be a responsible member of society, you still want to live within your means.
We buy things we don’t need with money we don’t have to impress people we don’t like. – Dave Ramsey
Don’t Pinch Pennies While Losing $$$
I’m all for frugal living, but it’s gotta make sense.
While I do shop at the dollar store etc., for some items and ensure I get them as cheap as cheap can be, for some other items, I would rather buy expensive aka good quality aka safe aka peace of mind…
The question is – are you saving pennies today only to lose $$$ tomorrow or in the long run?
Don’t Wait to Win the Lottery
Yes, don’t hope and wait for a lottery win to solve all your financial troubles. The odds are against you in that department, and it will likely never happen.
Don’t bank on luck. Plan – plan – and do something about your plans. You can turn your finances around for the better if you set your heart to it.
A can-do attitude will do you a lot of good this New Year.
Related: Surefire Ways To Improve Your Money Management.
