How to be Better with Your Finances and Become Financially Free

Our habits make or break us. All those little things we do without really thinking, determine so much of our lives. It is up to us to form good habits if you want to be financially free.

Often we don’t realise the impact small changes make to our finances and life.

In the book Atomic Habits, James Clear shows how even a 1% difference can have a drastic effect over time.

If you want to improve your finances, become financially free and achieve your goals, you need strong habits to make that happen.

Here are 5 habits for financial success and freedom.

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1. Make Saving and Investing Bills and Do it First

Saving and investing money need to be treated as two bills you pay first.

Think about it, you pay all your bills first, so are paying everyone else first and manage to live without whatever to ensure those bills are paid.

Do the same for your savings and investments and they will continue to grow.

Most people sort their budget, pay everyone else and every other bill they have then if there is money left over, they will save that.

Even worse is thinking they’ll invest one day but never make a solid plan to do it.

If you do it that way, chances are you will never save money, never invest and continue to live from one payday to the next, always struggling.

Even if you start by saving 1% and investing 1% each time you get paid, then increasing it to 2% as you get used to it then 3% and so on, it’s better than nothing.

You won’t miss that 1% and by gradually building on it, it is easier to develop the habit than suddenly trying to save 10% or 20% of your income.

How to Save and How to Invest

Find a high interest savings account to put your savings in to start with.

Some have bonus offers such as ING if you deposit certain amounts, including bonus interest, so it pays to do your research.

I find having my savings account with a separate bank to my general spending helps because then I don’t see it whenever I am using my account.

By not seeing it, I tend not to think about it much and am not tempted to transfer out of it.

With investing, it is up to you what you choose to invest in but I strongly urge you to learn about different types first and consider professional advice.

Two good books are Quit Like A Millionaire and The Simple Path to Wealth if you want to know about shares.

2. Tell Your Money What To Do

Without a plan, how can you achieve your dreams?

Make them solid goals instead of dreams, create a plan to make it happen then take action every day.

One part of this is having either a budget or a spending plan to tell your money what to do before it hits your account.

If it is allocated then you are less likely to blow it.

When you know exactly what you will do with every dollar coming it, it is easy to implement the plan, save, invest and improve your finances.

Automate as much of this as you can to remove temptation and ensure your goals happen.

Make anything you cannot automate a habit so you continue on the path you want instead of down the path life will take you if you don’t have solid habits and a plan.

Learn how to create a budget and stick to it, as well as how to get rich by being lazy with money (meaning, how to automate a lot of it).

3. Continually Learn, Review and Revise

There is always room for improvement so you need to keep learning, review your plans and revise anything or make changes as necessary.

How can you learn? Read books such as these 23 books that will change your life.

Listen to podcasts and watch YouTube videos from reliable sources, network and connect with like minded people who are also continuing to grow and improve their finances/life.

Review your finances regularly as well as your budget and goals.

I do an annual financial review to go over all my finances, compare bills and check my habits.

Each week I do an abundance meeting aka budget meeting to check I am on track and tweak things early.

If I leave reviewing all of it until the end of the year, small issues such as mindlessly spending $20 here and there can add up.

By keeping those things in check, I spot them early and it doesn’t get out of control.

Occasionally, I set goals that at some point no longer work for my family and I or don’t align with what we want in life.

It is ok to change goals or make changes to your plans provided you are doing it for the right reasons and not because you just want to give up.

Think about the end goal, the lifestyle you want and how good that will feel. Then keep going.

Read The Power of One More for tips on how to apply that attitude to your life.

4. Delayed Gratification

Learning to delay gratification will enable you to save more, invest wisely and live a life you love because you are focused now what you truly want instead of random impulse urges.

It can be difficult, especially if you have ADHD or similar (like I do) but it is worth learning or putting strategies in place to prevent you from acting on impulse.

A delayed gratification list is one way I prevent impulse buys. Things I want go on this list and if I still want them a month later, I can budget them in.

With my kids, we often take photos of things they want and will discuss them later or with my toddlers, it is a great way to get them to simply forget about it.

If you find it difficult, it might be worth getting help from others.

Whether it be therapy to uncover and heal some reasons you might be impulsive or if it is implementing some rules and having someone else help with your money.

Check out 5 tips to deal with temptation and 10 tips to stop spending.