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15 Financial Moves to Make a Habit Of

Author: Christy Bieber | March 05, 2021

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These 15 habits can set you up for success

A habit is something you do automatically that starts to seem like second nature over time. Habits can be good or bad.

These 15 financial habits are undoubtedly good ones. And they can set you up for a lifetime of building wealth. Try to adopt as many as you can ASAP so you can get on the fast track to financial security.

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1. Live on a budget

Living on a budget is one of the single best habits to develop. Your budget can ensure you're allocating money to important financial goals and spending your dollars in the way that provides the most value.

ALSO READ: When Should You Revisit Your Financial Plan?

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Hands holding a small chalkboard with the words Spend and Save, with Spend crossed out

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2. Live below your means

Spending less than you earn is another essential financial habit to adopt. If every dollar goes out as soon as it comes in, it doesn't matter how much money you earn. You won't be able to build wealth or develop financial independence.

A budget helps you live below your means, but you also need to commit to a different mindset. There's a lot of pressure to be a consumer, so you need to make the decision to limit how much you buy and how many financial obligations you take on.

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3. Set financial goals

If you don't know what you want to do with your money, it can be very hard to accomplish anything worthwhile. On the other hand, if you have clear goals you're excited about -- and that you've set a deadline to accomplish -- you're much more likely to be successful at achieving them.

There are a few financial goals everyone should have, such as saving for retirement and building an emergency fund. Beyond that, think about what's important to you and set specific, measurable, actionable goals to help you achieve it.

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4. Save 15% to 20% of your income

Many people don't know exactly how much to save, or they follow an old rule of thumb that says setting aside 10% of your earnings is enough for a secure retirement.

The reality is, if you want to build financial security both now and in the future, you should ideally be setting aside 15% to 20% of your income. The sooner you start doing that, and the more consistent you are about doing it throughout your career, the better off you'll be.

ALSO READ: Saving 10% of Your Income Really Isn't Enough for Retirement

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5. Negotiate your salary

When you apply for a job, do you negotiate the amount you'll be paid? When you have an annual performance review, do you ask your employer for a raise? If not, you could be passing up an opportunity to increase your income.

It's important you advocate for yourself in the workplace to ensure you're paid what you're worth. If you make a habit of doing this each time you get hired or every year when your review comes up, you could end up earning significantly more over the course of your life.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

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6. Bank your raises

When you get a raise, make the most of it by saving at least a portion of it -- if not the entire amount.

Before you get that first higher paycheck, automatically increase your 401(k) contributions or set up automatic investments to another account. Since you have never had the extra money from the raise, you shouldn't miss it. You can use it to help build a secure future before you ever get used to spending it on everyday needs.

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7. Pay off your credit card statement in full

Using credit cards for all of your purchases is a smart move because you can earn rewards. But that's not the case if you don't pay off your bill in full each month.

Carrying a balance on your credit card can be extremely damaging to your finances. Not only are interest rates very high, but you'll also be committing to a monthly payment that makes it harder to live on your earnings while also saving.

Make it a habit to ensure you can repay your statement in full every month so you never end up owing your creditors.

ALSO READ: 4 Tips for Maximizing Credit Card Rewards in 2021

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8. Pay extra toward your debts

If you owe any money -- whether on credit cards or personal loans or other types of debt -- make it a habit to pay more than the minimum. This extra cash will help you reduce your principal balance more quickly, thus making payoff easier, faster, and cheaper.

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9. Save for big purchases

Almost everyone needs to make purchases at some point that they can't just afford to pay for out of one paycheck. This could be a wedding, a vacation, a car, or appliances.

Rather than borrowing for these big purchases, make it a habit to save for them ahead of time. Start a savings account for trips, another for a new vehicle, and one for any other large items you intend to buy in the future.

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10. Comparison shop

When you're buying something, make it a habit to shop around carefully and compare prices both online and in person.

You'd be surprised how much of a variation there can be in prices, and there's no reason to pay more when shopping around is so easy thanks to the internet.

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We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

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11. Use coupons

Coupons can help to make most of your purchases less expensive. You can clip coupons from the paper for food and toiletry purchases, or buy these types of coupons for a small fee from online websites where people clip them for you.

You should also make it a point to search for a coupon or promo code before making any online purchase. There are apps that do this for you, or you can do it manually.

Whenever you use a coupon, consider transferring the saved money directly into a savings account.

ALSO READ: 21 Ways to Save in 2021

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12. Institute a prepurchase waiting period

You can cut down on impulse buys by making a habit of waiting at least 24 hours to purchase something you think you want. This will give you time to consider whether your desire was a passing impulse or you legitimately want the item.

You can spend that in-between time shopping for prices to ensure you get the best deal if you do go through with the purchase.

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13. Research investment options

When you're saving for retirement or otherwise putting aside money you won't need for at least five years, you should be investing some of it in the stock market. That will help you maximize your chances of earning reasonable returns while limiting the risk you're taking on.

You don't want to invest in just anything, though. It's important to carefully research different options so you can decide what stocks, bonds, or exchange-traded funds (ETFs) to invest your money in.

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14. Monitor your asset allocation

It's important to build a diversified portfolio of different assets if you want to be a good investor. And you don't want to take on too much risk with the money you invest.

As a result, you need to carefully monitor your asset allocation and rebalance your portfolio as needed. Make a habit of doing this once a year, or after major life events such as retirement, so you can ensure you have the right mix of investments for your current and future needs.

ALSO READ: 5 Things to Know About Asset Allocation

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15. Track your net worth

Net worth is an excellent barometer of your financial progress. It's calculated by adding up the value of all your assets and subtracting the amount of all of your liabilities.

Making a habit of tracking your net worth helps you see if your financial decisions are the right ones. If your net worth is growing, you're making progress with building wealth. If it's declining, you may need to change course (unless it's a temporary bump caused by, say, borrowing to earn a degree).

You can watch your net worth change over time to help you see the progress you're making by practicing all of these other smart habits.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Previous

Next

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Adopt these financial habits today

Practicing these 15 financial habits can go a long way toward helping you feel good about money management -- and they can set you up for financial security in the future. Adopt as many of them as you can today. You'll be glad you did.

The Motley Fool has a disclosure policy.

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