Ten Healthy Financial Habits

As part of my ten year celebration here is another post with ten tips, and I thought I should get backs to the basic and core of my brand and talk financial habits. Pick and choose some or all of these habits to get to a more financially healthy you.

When we are financially balanced and healthy it contributes hugely to a healthy mental health. It’s really important to develop or start some of these habits to create balance and harmony.

Create a Spending Diary

This is a worthy exercise even if you do it just for a few days to understand how, why and where your money goes. Grab a note book or use your phone or set up a spreadsheet to keep a daily record of what you are spending. You will need to include everything in this, so your daily spending on groceries, fuel, days out etc. Plus add in what bills are automatically paid. Don’t forget to add in all the little things, parking, coffees, lunches out, pocket money. Everything that you spend on.

Review your spending diary at the end of each week, what is your total spend, what are the spending patterns that you might want to change (maybe a late night Amazon purchase habit) and what habits do you want to maintain.

It’s healthy as it keeps you in touch with what you are spending and gives an element of control. It will also give you the knowledge and information on where you might need to cut back. Seeing it on paper or in a spreadsheet that you have spent £100 on lunches out in a month can be a powerful reminder that this may be area where you can cut back.

Create a Budget

You can use the spending diary information to create a simple budget. The word budget scares a lot of people but I promise it doesn’t have to be complex. Here is a post I have previously written giving you the tools you need to create the budget.

Even if it’s a budget on some of the more variable monthly expenses that you keep track of, then its progress. Maybe you keep track of your eating out costs, or your spending on the children or your daily coffee habit, it’s worth it just to give you an extra level of control and understanding.

Emergency Savings

The safety net and the reliance upon having emergency savings is huge. Set up a separate account with a different bank to your current account and build up your emergency savings balance. Maybe you save £5 a week, but start small and it will grow before you know it into something substantial.

Your emergency savings are used for real emergencies, such as car repairs, a new washing machine or accidental damage to household essentials. It’s up to you how much sits in there, maybe £500 is enough to provide you with a feeling of comfort or maybe you need £5,000. I always feel happier when I have three months worth of essential expenses covered.

Another simple way to start building up your emergency savings is by using a automated savings app such as Plum. This connects to your bank account and makes small savings within your set parameters. You just set it up and let it work it magic, you will be surprised how much has been squirrelled away after a few months.

The emergency fund is also an essential safety fund if you need to escape from a job or a relationship.

Keep a diary note of when all essential bills renew each year

I am talking about bills such a broadband, mobile phones, insurance and energy bills. Don’t let them just roll over and auto renew as you could be hit with a higher annual charge. Always do a comparison to see if there is better deal with a competitor. Or even if you call up your existing provider and ask for a better deal you might save. Its always worth doing the research and/or asking the question.

Talk to friends and family about money

This is a really important one, to take away the shame, embarrassment and taboo of talking about money with your friends and family. It should be an open topic, share your worries, suggestions, plans and panics with those close to you. They will very likely have different ideas that might help you, and the most important thing is to get any worries out of your head and just to share them with others. A problem shared really is halved.

I often have open and honest conversations with my children about money. I tell them when we are having a high spending month (like this month with a car repair bill, home insurance, three big birthdays and school trips to be paid for, £1000 gone). Also I share how much I earn, how much I have saved and how much I have in my pension. They take an interest they are keen to learn.

Prioritise yourself before your children with future savings

I often encounter people who have savings accounts/investments set up for their children, but don’t have enough going into their own savings. Put money into your own Stock and Shares ISA before putting money away for the children. It’s like putting on your own oxygen mask first

Pay into your company pension/private pension

Following on from the saving prioritisation comment it’s so important to pay into your work pension, and or a private pension. Relying on the state pension to provide you with income when older will not be enough for a comfortable life.

The earlier you start with your pension contributions the better. Company pensions are a no brainer, your company will contribute an amount of money for you, along with your contribution and there are tax benefits too.

This is extra money accessible later in life and really will make a huge difference, and the younger you are when you save the more time it has to grow in value. but equally it is never too late to start putting money away into your pension.

Do not bury your head in the sand about debt

So many of the UK population are in debt, and for many it is unmanageable and people don’t know where to turn or what to do to resolve the situation.

Please don’t ignore the debt, letting the interest build and build. There are so many places to reach out for expert help. Christians Against Poverty and Step Change are two brilliant charities that I recommend.

I have so many article to read on the subject of debt, as I have been there, I was £16k in debt and struggled to see a way of paying it back. I did, I beat that debt. You can read all the articles here.

Let purchases sit in an online basket for 24 hours

A little simple tip when spending money online is the 24 hour rule. Add the item you are going to buy to your online basket, but let it just sit there for a day. If you still have the inclination or desire to buy it after a pause then go ahead, but what you might find is that you decide that you don’t actually need or want it!

Also another cheeky marketing tactic is often you will see a voucher code or an email discount appear once the retailers see you have an item in your basket. Passing on an extra discount to encourage you to buy that item! At least the delay means you will benefit from an extra discount.

You are not bad with money, you just need to realign your thoughts and feelings

I hear people say they are bad with money all the time. It’s simply not true. Financial habits and mindsets can all be reset and relearnt. You can move to a place where you feel in control and happy about money. Just employ a few of these tactics and you will get there.

You can also read My Ten Proudest Moments of Mrs Mummypenny here.

And my Ten Business Learnings in the Ten Years of Mrs Mummypenny here.