27 September 2023

Seven financial habits to help make you smarter with your money

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Liv Steigrad* shares some simple habits that might help increase your financial smarts.

You don’t have to know a lot about money to be smart with money.

Being smart with your money is about knowing yourself and your strengths and weaknesses, and then setting things up accordingly.

It’s about building habits to carry you when your willpower stumbles.

Check out our list of seven habits that might help increase your financial smarts.

  1. Automate whatever you can

Automate your savings, automate your loan repayments, automate your bills.

The fewer steps you have to actually make to move your money to where it needs to be, the more likely you might be to stick to it.

The great thing about automated savings and repayments? Ideally, once it’s set up, there are zero steps for you to do each month.

You can set and forget.

  1. Have specific, meaningful goals

It can be hard to stick to your savings budget, especially when you have to give up on yet another thing to make it happen.

But you’ll likely feel less of a twinge when you have to skip that extra drink when you remember the money’s going towards something you really want.

Whether it’s a holiday, a house, retirement, or even a less responsible-sounding purchase such as a flash new tattoo, it’s great to have a goal.

  1. Invest

Keeping all your extra money in a savings account isn’t always as savvy as it sounds.

Sure, there is little risk, but over time, your purchasing power drops lower and lower.

One way to be more proactive is to consider investing.

A little bit of research and a long enough time horizon could see your investments grow.

Keep in mind that investing is not without risk and you need to be prepared for markets to go up and down.

Here’s some more about what to expect as a first time investor.

You could also chat to a financial advisor or take a look at some of the apps out there (such as Spaceship Voyager), which can make investing more accessible.

  1. Don’t spend that unexpected cash

Tax refund? Inheritance? Birthday money?

As tempting as it might be to treat yourself, you might be better off tucking that extra money away in a savings or investment account or putting it towards your debt.

After all, if you weren’t expecting to get that money, you won’t miss it.

And your financial goals will thank you!

  1. Prioritise high interest debt

If you’re juggling multiple debts, it can be really frustrating trying to spread out your cash to cover all the repayments.

Sound familiar? If so, you might want to consider the avalanche debt-busting method.

First, you find the debt with the highest interest.

For all your other debts, you make the minimum repayments.

You then put everything else towards knocking off that high interest debt.

Once you’ve done that, do the same for the debt with the next highest interest.

You’ll end up paying less interest overall, plus you’ll feel great each time you completely finish paying something off.

  1. Track your spending

Doesn’t matter how you do it, just do it: use a spreadsheet, a notebook, or one of the countless personal budget apps available.

Seeing exactly where all your money is going can be the wakeup call you need to change your behaviour and get on track.

And hey, if you’re happy spending $87.50 on food delivery services every week, that’s cool!

At least you’re making an informed decision.

  1. Learn however you can

Finance, investing, and optimising your finances generally?

Well, they can seem a bit scary.

Rather than waiting until you need to know something specific — oh God, what’s the best way to set up this investment property so I don’t lose everything to tax? — start consuming information earlier on.

Whether it’s books, blogs, podcasts, or videos, find a few you like, and let your brain start absorbing the information.

Over time, you’ll develop a general understanding of how things work, which will make your research and decisions easier when the time comes.

*Liv Steigrad is a creative copywriter with a background in psychology.

This article first appeared at spaceship.com.

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