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Personal Finances Spending Plan

3 Ways to Make Financial Habits Stick

It can be tough to stick to healthy financial habits. We all fall short at times, yet it’s important to remember that you can always start again. The journey of financial health does not come out of once-in-a-lifetime transformations. James Clear says “All big things come from small beginnings. The seed of every habit is a single, tiny decision.” The great news is we can make some small changes that sprout the seed of financial health.

 
1. Make paying yourself a priority.
Reinforce your intended saving habits by setting up an automatic deposit into your savings account. An automatic transfer puts that money into your savings account every time you get paid, making it easier to meet your savings goals and less tempting to spend that money on something else. Many employers make it easy for their employees to save by offering direct deposit options, where a portion of your paycheck can be put into a savings account every pay period. You can also set up an automatic transfer from your checking account to a long-term savings or investment account. As you work to achieve your savings goals, keep in mind that you can increase the amount you contribute, while ensuring it works for your spending plan. When it comes to healthy habits for managing your finances, paying yourself first is vital for your financial future.

 
2. Save time and avoid late fees by setting up auto-pay for your bills.
Another way to support healthy financial habits is to set up auto-payments for your bills. If you have recurring bills that you plan for every month (like a cellphone bill or a monthly loan payment) you can use auto-pay to make sure those bills are always paid on time. If you have the option to choose your payment dates, set them up shortly after your paycheck is deposited into your checking account. With savings and bills withdrawn early in the pay period, you’ll have a better sense of what’s available for other spending. An added benefit: you’ll avoid late fees.

 
3. Plan ahead and maximize your tax benefits by signing up for automatic contributions to a retirement account.
If your employer offers a retirement plan, such as a 401(k) or 403(b), sign up to have your contributions automatically deducted from your paycheck. These plans place a portion of your pre-tax income into a retirement account, giving you a lower taxable income during your working years, and growing your long-term savings to provide you income during your retirement. If you don’t have access to a retirement account through your employer, you can make automatic contributions into an IRA account instead. Automatically depositing part of your paycheck into a retirement account means that money never lands in your checking account, so you won’t be tempted to use it elsewhere.
 
At Credit Human, we are committed to helping you take those next steps as a financial partner you can count on for whatever life throws your way. Visit your neighborhood Financial Health Centers. where our team can spend time learning more about your financial situation and ways we can help you build the slack you need to thrive.

By: Credit Human, August 25, 2021

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