Blog

5 Key Financial Habits to Adopt

Posted April 1, 2022 in Articles
Photo of Elle Martinez, Guest Blogger
by Elle Martinez, Guest Blogger
Founder/ Podcaster, Simplify & Enjoy

Essential Financial Habits to Pick Up

I can't believe we're already in springtime mode; this year is flying by!

How are you doing with your financial goals so far? If you're not where you want to be, no worries. There's still plenty of time available to get you back into the swing of things.

Earlier this year, I had the pleasure of chatting with Billy Hockfacker on the podcast about building up better habits.

Adopting better habits is something he's pretty familiar with as he's not only a gym owner and coach, but he and his family paid off more than $100k of debt. I want to share a few highlights from our discussion.

Keeping Habits is More Than Willpower

Typically, you'll hear how important it is to develop willpower. It's true, you need self-discipline as you're changing your behavior, but relying on willpower alone can be a recipe for failure.

A better way to approach things is by creating systems that make it easier to finish your goals. Let me give you an example.

If you're trying to work out several times during the week, you could tell yourself just do it. How likely will you keep the new routine?

Now imagine having your clothes laid the night before. You also know which workout you're doing and have your playlist ready to go. Can you see how much more likely you're going to follow through on this routine?

It's the same with your finances. Again, having a system in place can help you achieve your financial goals.

Here are five key habits you can use to create an easy-to-manage financial system!

Graphic is explained below.

Know Your Numbers

We have to review our numbers to see where we are and what we need to improve on.

Some important numbers you should know are your net income and expenses for the month so you can figure out how much ahead or behind you are at the end of the month.

For a snapshot of your overall finances, it's handy to have your net worth. It's simply adding up all your assets (your house and car values, investments, and savings) and subtracting your liabilities (your mortgage, car and student loans, and other debts). 

While I love digging into our budget spreadsheet, I know many people aren't so keen on it. Thankfully, some great money apps and programs like Mint, Tiller, and You Need a Budget can give you the numbers quickly and easily.

Set a SMART Goal

Now that you have a clear idea of where you are now, it's time to figure out where you want to go. What goal would you like to knock out this year? What are your plans for the next few years?

Whatever goal you choose, keep it SMART. What does that mean? It means your goal is:

  • Specific
  • Measurable
  • Attainable
  • Relevant
  • Time-Based

Break It Down into Steps

With a SMART goal, it's now easier to work backward from your deadline and see what progress you need to make each month or paycheck. For example, let's say you're looking to pay off $2,700 of credit card debt before the year wraps up.

To reach your goal, you have to pay $300/month. After reviewing your budget, you can allocate $200 each month towards that. Now you have to decide if there's a way you can earn an extra $100 a month with a small side gig, if you want to go back and optimize your expenses, or if you want to push back the deadline.

Automate Your Money

Once you have a plan and know how much you need to put towards your goal, it's time to automate your finances.

This step is often overlooked but crucial. Most of us are busy. If you haven't already, set aside an evening to get your budget set up.

Have an Accountability Partner

If you're married, having your spouse as your go-to person is wonderful. It's another way to connect with each other as you talk about your goals and progress.

If you're single, grab a buddy or two, have regular check-in, and support one another when hiccups happen.

By putting these pieces into place, you're building a financial system that is flexible and fits your goals and situation.

Use Coastal's Tools to Manage Your Money

With Coastal on your side, you have plenty of additional tools and financial calculators available to make it easy to manage your money!

Find The Perfect Calculator For You

Financial Education Center

Putting the financial tools you need right at your fingertips.

Related Posts

  • Member Tips

3 areas that you should revisit in your retirement plan.

  • Articles
See how you can organize and maximize your savings so your money is working for you.