10 Better Money Habits to Fix Your Family Budget

Nov 28, 2017 | Publisher: Parents Toolbelt | Category: Finance |   | Views: 15 | Likes: 3

10 BETTER MONEY HABITS TO FIX YOUR FAMILY BUDGET Habits can make or break any aspect of your life. Whether it's your health or the cleanliness of your car, your habits are the most important influence. Poor financial habits can create situations that require years to rectify. The power of eliminating a few poor financial habits and adding a few good habits is staggering, especially when viewed with a long- term perspective. Identifying and Eliminating Your Poor Financial Habits "It seems, in fact, as though the second half of a man's life is made up of nothing, but the habits he has accumulated during the first half." - Fyodor Dostoevsky Most Damaging Poor Habits Failing to track your spending Purchasing impulsively Not taking debt seriously Not saving Failing to understand The Latte Factor Paying bills late These habits seriously limit your future: What are Your Negative Financial Habits? 1 Make a list of your current financial troubles. 2 Determine which habits are creating these challenges. 3 Find a replacement behavior. What are Your Negative Financial Habits? 4 Make a commitment for one month. 5 Remind yourself of how great it will be to drop this habit. 6 Deal with slippage. 7 Reward yourself for success. Top 10 Positive Financial Habits that Make a Big Difference The Good News! A few good financial habits can completely change your financial situation! Live below your means. Avoid debt. Save money first. Pay off debt aggressively. Separate wants from needs. Have a budget and follow it. Pay close attention to financial habits that impact your family. Keep the future in mind. Pay your bills automatically. Review your finances each month. Tips for Creating These Beneficial Financial Habits "Achieve success in any area of life by identifying the optimum strategies and repeating them until they become habits." - Charles J. Givens A Strategy for Success Reduce your discomfort. The key to changing your habits is to m inim ize the am ount of discom fort you feel. Accumulate small changes. Limit yourself to only one habit at a time. Know your "why." Predict your obstacles. Examine your triggers. Put your commitment on paper. Putting It All Together "Habit is habit, and not to be flung out of the window by any man, but coaxed downstairs a step at a time." - Mark Twain An Example: John's Story John wants to stop drinking coffee at Starbucks each morning and save that money for the family vacation. So, John's goals are to: Drop the habit of spending money on expensive coffee. Add the habit of saving $150 each month ($5 x 30) John attacks his bad financial habit and creates his new financial habit intelligently: He decides to make his own coffee at home and take it to work with him. 1. John finds a replacement behavior. John makes a list of what he'll gain by dropping his old habit and adding the new one. He imagines his family and himself enjoying a trip to the coast. His wife and kids are happy, and he's proud of himself for making the necessary changes that made it possible. 2. He gets his mind in the right place. G et t ing up on t im e to m ake coffee each day: John finds a coffee maker with a timer so his coffee will be waiting for him when he wakes up. D riving by Starbucks each weekday m orning: John finds a new route to work. He's worried about spilling his coffee on his suit and new car: He purchases a couple of travel mugs so one will always be available. He doesn't believe he'll rem em ber to t ransfer $35 each week from the checking to the savings account : He sets up an automatic transfer with his bank. He was able to do this online in just a few minutes. 3. He considers his obstacles and develops a plan to deal with each one. He normally gets the largest size coffee. He decides to bring a small amount of coffee from home and purchase the smaller size at Starbucks. His total coffee consumption will remain unchanged, but he's weaning him self off the expensive coffee. He also alters the saving plan to only transfer $15 the first week. Over the next few weeks, he'll continue the trend. It won't be long before the transformation is complete. 4. John decides to make incremental improvements. The first is driving by the Starbucks store. He's taken care of this with the new route to work. His second trigger occurs during his morning shower. That's when he starts thinking about how great it's going to be to have that first sip of his caf latte. He decides to combat that trigger by thinking about his future vacation and the satisfaction he feels while drinking his homemade coffee. 5. He examines his triggers. He knows that there's a chance he's going to break down during a stressful morning, dump his homemade coffee out the window, and pull into Starbucks. He figures if he's compliant 90% of the time, he's doing well enough to consider himself successful. 6. John is prepared for slips. If he can make it 30 days without a slip, he's going to reward himself with an espresso machine. He loves the idea of the shiny machine sitting on his kitchen counter and he's sure he can make better coffee than he can currently make at home. It's within his budget, and he considers it an exciting reward. 7. He has a reward in mind. John does have the occasional slip, but he's eventually able to purchase his espresso machine and take his family on that vacation. It wasn't very challenging because he was prepared, proceeded slowly, and found suitable substitute behaviors that provided the same benefits at a lower cost. 8. A happy ending Conclusion Putting smart, effective financial habits in place ensures financial health, just as poor financial habits guarantee financial disaster. Changing any habit can be a challenge. Financial habits are not an exception. However, by following an effective plan, anyone can change their poor financial habits and change their life for the better. Start today! You'll be glad you did! For more help with family budgeting: parentstoolbelt.com Read our post on training children to be financially savvy https://parentstoolbelt.com/allowance-for-kids/

The power of eliminating a few poor financial habits and adding a few good habits is staggering, especially when viewed with a long-term perspective. Here is a 10 step process for developing better money habits. Read our article on training kids to be financially savvy.

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Through our Parents Toolbelt blog we provide information, tips and reousrces for parents, tpo help young families thrive.

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