Adopting better money habits could help you take more control over your financial life, allowing you to save more, spend strategically and build the wealth you want for yourself and your loved ones. But less intentional money habits may slow your financial progress, make overspending easier or prevent you from saving for the future.
Let’s look at 6 healthy money habits that may help you build your creditworthiness, save for the life you want in retirement, gain financial independence and keep you resilient during setbacks along the way.
Better money habits to embrace
The best money habits will help you save, use and enjoy your money while keeping your spending in line with your income.
Pay off bills in full
Carrying a monthly credit card balance is common, and having a loan balance is often inevitable, especially if you have a mortgage or student and car loans. But deciding not to pay bills in full when you can might create a cycle of debt that’s hard to break.
When bills are underpaid or unpaid altogether, you might experience:
- Expensive interest charges, especially if you’re only making minimum payments on credit card balances
- Having to cut back on or even draw from savings to pay down that interest
- Higher rates of credit utilization, or the amount of your available credit in use, which often impacts your creditworthiness
By paying your card balances in full each month, you may be able to avoid credit card interest in some cases. And in certain scenarios, paying more than your monthly minimum loan bill could also help you save more money on interest and pay down debt sooner.
Max out your workplace benefits
Looking closely at your job’s benefits may help you uncover savings and spending accounts or other financial tools that can help you reach your goals, such as:
- A Health Savings Account (HSA) or Flexible Spending Account (FSA) that lets you contribute pre-tax dollars to help pay for qualified medical expenses
- Life insurance and disability plans that help protect your income and safeguard your family’s finances, whether you're gone, sick or unable to work
- If your job offers it, a 401(k) retirement account that lets you contribute a portion of your pre-tax wages and accepts a matching pre-tax contribution from your employer
- Retirement contribution matching programs for qualified student loan payments (QSLPs), where your employer makes 401(k) contributions that match your student loan payments — even if you don’t contribute to a retirement account
- At-home office stipends or employee allowances to cover travel, office items, work-related electronics and moving expenses if you’re required to relocate
- Unique employer perks like family and life planning services, health and wellness stipends, commuting coverage, gym memberships or reimbursement for childcare costs
Reassess your emergency fund
As you grow and evolve, so can the types of financial goals you might have, like buying a new home or vehicle, saving for a long vacation, moving to a more expensive location or planning for a child. And because financial demands can change overnight, creating and regularly adding to an emergency fund is crucial for reaching and maintaining financial stability.
Automate your savings
Paying yourself first means setting aside money from every paycheck before paying any other bills. Automating deposits to your savings account could help you consistently pay yourself first, build up short-term savings for unexpected costs and steadily work toward larger financial goals that may require a large upfront investment without too much thought.
