3 Tips To Change Your Money Habits Ahead Of The New Year
- The new year is the best time to change any unhealthy money habits.
- Unhealthy money habits can keep you in a scarce mindset, preventing you from reaching your financial goals.
- Healthy money habits start with a new mindset based on abundance and growth.
The new year is approaching fast, and a good way to be prepared for it is by identifying any past financial habits that have hindered you from achieving your money goals. Below are a few tips that can help you change your money habits and mindset ahead of the new year.
Results of Unhealthy Money Habits
Unhealthy money habits can and will hinder your financial future. Most often, these habits can stem from a lack of financial literacy. Here are a few ways to spot unhealthy money habits:
- Spending more than you earn
- Large amounts of debt with no plans on paying it off
- Poor credit score
- Paying higher interest rates
- No emergency fund
- Impulsive spending
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Money habits can stem from your childhood and learning from your parents and family members on how to deal with money. Whether your parents were good with money or not, habits are changeable. Most times, all it takes is shifting your mindset, identifying the problem, and setting attainable goals.
Shifting Your Mindset (Unlearn to Relearn)
The new year is the perfect time to welcome and embrace those new money habits. It is also the ideal time to throw out what has not worked for you in previous years. It will be hard but rewarding to unlearn bad money habits while relearning new ones. Healthy money habits can set you up for a more financially successful future.
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Before now, your mindset about money may have resulted from your past beliefs or environments that you were a part of. Here are a few tips to help you learn how to shift your mindset:
Calculate Your Income and Expenses
Part of the process of becoming financially successful is becoming aware of your income and expenses. A good way to determine whether or not you should set new money habits is to figure out if you are spending more than you make each month.
Recommended Read: How to Create a Budget That Fits My Lifestyle
Listen, Learn, and Apply
The first step in shifting your mindset is listening to personal finance podcasts and financial education videos. By learning how others handle their finances and have become successful in doing so, you will better understand what will and will not work for you. Remember that personal finance is "personal,” and everyone's journey will be different.
If you are not into technology or video streaming, you can also shop for a few personal finance books at your local bookstore. Personal finance blogs are also good sources of knowledge.
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The idea of watching videos, listening to podcasts, or reading books is to curve the mind towards a new way of thinking. Expand your horizons by taking an extra hour out of each day to learn more about personal finance.
Identify the Problem
A doctor can't prescribe you any medication to fix the problem without first knowing about the symptoms you are experiencing. The same goes for figuring out why you have unhealthy money habits. Finding the solution to your bad money habits comes only after identifying the problem.
Take some time to write out the reasons why you feel like you've developed unhealthy money habits over the years. Being open and honest with yourself will help you face your fears head-on and clean up bad habits.
Identify Your Feelings
Think about how you feel when you are spending money. Then, ask yourself a few of these questions written below and write down your answers to each of them:
- Am I stressed?
- Am I feeling anxious?
- Do I want this item just because everybody else has it?
- Do I need it?
- Can I live without it?
The questions are aimed to help you identify your feelings and thought process behind spending money. This also helps to determine what your spending triggers may be. Recognizing this problem is being conscious of your spending and how you feel when spending money. The more aware you are, the more likely you are to make good decisions when making a purchase.
Set Goals
When it comes to setting goals, the key is to implement them into bite-size plans and celebrate along the way. Depriving yourself of the things you like will cause you to overspend later. The objective is to become financially successful, not to be in debt.
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As you check off each goal you have accomplished, you will feel motivated to get to your next destination. To make it more fun, try adding in a friend or a group of friends on our journey. Involving others in your financial journey will help you stay accountable and committed to your goals.
Change your habits together and hold one another accountable. It makes it easier when life gets hard. Your friends will be there to remind you of your goals that will, in turn, set you back on track.
Give your goals a timeline, but try not to get discouraged if you have to move a few dates around from time to time. However, try not to make it a habit to move dates around with every goal you set. This could potentially lead to creating a never-ending cycle that will further prolong your financial journey.
Changing your money habits takes time, patience, and trial and error. There will be some things along the way that you will try and will not work out for you. You may occasionally have to reroute plans and times lines, but keep going no matter what. Celebrate your accomplishments, whether big or small, every step of the way.
The benefits of healthy money habits are so rewarding. There is less stress in knowing that you are financially prepared in case of an emergency, and you have little to no credit card debt, and you are completely controlling your spending. But, most importantly, you are in a clear, conscious headspace to make good money decisions.
What tips are you implementing to help your money habits for the new year? Comment your answer below.
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