On the occasion of Promise Day, we hope you make one essential promise to yourself. The new financial year is right around the corner and it’s the right time for a new resolution or two, from a financial point of view. Look at these resolutions as promises to yourself, promises you intend to honor. Most individuals make resolutions in euphoria- when they get a raise, or after reading a profound self-help book. Soon, enthusiasm and charm fade away and individuals find themselves getting back to square one. We bring you 5 Ways to Inculcate Good Money Habits that will help you cruise through the year without any trouble.
Start by taking small steps
Starting small sounds silly but that is what will help you in the long run. Let’s say you want to change a small habit like waking up early. You usually wake up at 8 in the morning but wish to wake up at 6, then you should start setting up your alarm 5 minutes before your regular time.
I know it looks too simple but that is exactly what I am trying to tell you! If you take baby steps then you are more likely to achieve your goals. You are setting a goal you know you can easily accomplish and therefore you feel motivated when you actually accomplish it.
Use this same ideology when it comes to making savings and you will be surprised to see the difference you will make by the end of the financial year.
Label your goals and investments
Your commitment towards your goals will be stronger when your investments are linked to a particular financial goal. Don’t just waltz in a bank to open a Fixed Deposit (FD) for a random period. Your efforts should be aligned with your goals.
When you label your investments, your goal will automatically have a greater meaning.
Habits and resolutions are different
While resolutions are made with a conscious mind, habits, on the other hand, are cultivated so that they can eventually be dealt with our subconscious mind and that is why they tend to stick.
So, we advise you to take things slow when it comes to investing your money. Either start a Recurring deposit (RD) or follow a Systematic Investment Plan (SIP) of a mutual fund.
All humans wish to make progress. We form habits and move ahead. So, once you form a habit of investing, you won’t flinch in increasing the investment amount.
Planning in advance will not only help you in making wise financial decisions but will also significantly reduce the habit of impulse buying.
For example, if you know you are going to receive a Christmas bonus for $1000 dollars then you can analyze the ways you would like to spend all this money. You might want to pay your dues, or take up classes or simply want to go on a vacation. Whatever it is that you want to do, just plan in advance to see better results.
It’s a good idea to get your family’s buy-in when you are making a financial plan. Your family will feel appreciated and will be more cooperative towards the goal if you include them in such decisions.
If your kids know they can only go out twice a week because you plan to save money for a trip to Hawaii, then they might even surprise you by going out only once because they feel you value them enough to be a part of this decision.
Also, you will be inculcating a habit that will stand them in a good stead in the years to come.
Also, read this to know about the A-to-Z of financial jargon.