Good financial habit to keep you out of trouble - The Dreaming Dad (2024)

This post may contain affiliate links. If you make a purchase I may get a commission at no cost to you. Please see the Disclaimer for additional information.

Money. It all start with good financial habits

I don’t know for you, but it’s one of the thing that I worry about the most. It always seem that I never have enough of it to do everything I need to do. It seems that almost everyone wants to earn more and more money.

But let’s be honest with yourself for a minute. Having more money is always nice, but if you don’t know how to manage that money, you will always be wanting more and more. Successfully managing your money will bring you amazing results.
There are some good financial habits that you need to follow if you want to keep yourself out of trouble, financial trouble that is!

Don’t forget that you are at the helm, you got full control of your own financial future.

1. Personal Income

Maybe that’s sounding pretty obvious. But it’s the most basic of all the good financial habits:

What are you really bringing home at the end of the day.

What does it means?
It’s knowing what is left in your pockets after all deductions, be it taxes or retirement plan. Don’t forget to include all of your income stream, even the passive ones.
Knowing what you got in your pockets each month will help you know what kind of money you can ultimately use.

For those of you who own a business, if you’re not giving yourself a salary, calculate the average of your earning for the last 6 months. This should give you a fair indication of what you can spare.

Related article: PASSIVE INCOME – HOW TO MAKE MONEY WHILE YOU SLEEP

2. Personal Goals

We all have goals. We all need goals. Having a known, quantitative financial goal is one of the truly good financial habits. You want to save money for a house? You need money to prepare your marriage? Or even just repaying your debt?

A good financial goal has to be clear and achievable in a predefined amount of time. Here are some examples:

• Saving 250$ per month for a family vacation for next year;
• Saving 50000$ in 2 years for a cash down to buy a property;
• Saving 12000$ in a year for an emergency fund; and
• Save 25% of my yearly income.

You should not set any vague or unclear goals, you will have trouble to achieve them and you will not be able to measure your success.

• Save money for my vacation;
• Repay some loan as soon as possible;
• Save money every now en than.

Again, having clear goal with a set end date will allow you to monitor your progress and be much more.

Related article: EASY WAYS TO MAKE AN EXTRA 100$ PER DAY

3. Budgeting

Having a budget and following that budget are 2 really good financial habits that everyone should have, it will really help you manage your finance. You already know your total income (see above). You now need to determine your fixed expenses and your variable expenses.

Fixed Expenses

You need to determine the fixed expenses that you have each month. Your fixed expenses are the one that you have the less control on, the one that you cannot easily reduce. Here are a few examples:

• Mortgage;
• Rent;
• Car payment;
• Insurance; and
• All your bills.

Variable expenses

You also need to determine the variable expenses that you have each month.
Here is a list for them:

• Groceries;
• Travel expenses;
• Cell phone bill;
• Cable bill;
• Entertainment (movies, music, streaming); and
• Clothing.

You have much more control on these expense, there are ways to reduce them by getting better deals, cashback or even get rid of some services.

Analyze your spending

Now that you have figured out where you are spending your money in the last 3 to 6 months, you can set yourself some realistic goals to reduce your variable expense. You can now choose the amount you wish to spend in each category going forward. Once that is set up, you need to keep track of all that information to understand your progress and to make sure that you are following your plan.
For that you can either use a simple excel spreadsheet or you can use an app such as Mint or even better yet, Personal Capital.
This fantastic piece of software will allow you to keep an eye and manage your entire financial life from a single location, this is not only a good financial habit but almost a necessity.
Not only can you track your personal net-worth, but you can also create budgets, manage your investments, plan for retirement and simply reach your goals faster!
The greatest advantage? It’s free! I encourage you to try it out!

Related article: EASY AND QUICK WAY TO SAVE THOUSANDS OF DOLLARS EACH YEAR

4. Think about yourself first

Now that you now what you have in your pocket, what is your goal and know what you really need to spend, you need to think about yourself. This has to be the one good financial habit that people don’t think of!

Once you have your paycheck, or dividend check or whatever other income you might have, pay your fixed expense and then save toward your goal.

Take the money off your checking account and put into an investment account, a spare change account or a saving account! Once it’s transferred, forget it don’t touch it until your goal’s dead line is there.

5. Stick to the plan

Now, you have spent a great deal of your precious time toward setting up goals, analyzing your expenses and reducing them. It’s time to follow your plan. Otherwise, it makes no sense to invest all that time! You should make it a good financial habits to review your financials often.
You need to stick to your budget. If you can’t stick to it every month, it’s time to reevaluate your spending again.

Again, it’s one of the good financial habits to make sure that your goals are achievable in a real amount of time, if it’s not the case, you might feel like you are failing to achieve your goals every month.

Don’t try to chew on something to big, you need to walk before you can run.

Conclusion

If you keep on following these good financial habits and if you can stick to your plan, you will place yourself in a much financial position and you will be able to actually reach your goals.

Remember that there Personal Capital will help you see the overall picture of your finance, it will help you stick to your plan!

Again, I encourage you to give it a try!

Follow us on Pinterest for additional awesome ideas!​

Popular Posts