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How To Develop Good Financial Habits

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Saving for retirement is not usually a priority for most workers, particularly when they’re just starting their careers.
With the student days just behind them, the top priority is to spend, and most workers develop a habit of living ‘paycheck to paycheck’, as soon as they get their first job. Unfortunately, over 60% still retain the spending habit for most of their working life. So before you fall into this hard-to-break habit, create a ‘savings mindset’. Adopting good financial practices is never too late, and here are five straightforward tips.


Living within our means is a saying we’re familiar with, but few do it. Easy access to credit is the main contributor to indebtedness and it’s created a ‘must have now’ mentality, and lead to consumerism and high consumption.

However, learning to live within your means, i.e., within 90% of your wage, is easily done once you’ve broken the spending habit. The starting point to being in control of your money is understanding where it’s going and on what expenses. With a higher level of appreciation of ‘needs’ versus ‘wants’, you can cut your monthly expenses and also create and live within a budget.

Needs Versus Wants

Create a list of everything you’ve purchased recently. What did you buy during the last couple of months? List the items by ‘need’ and ‘want’. The ‘want’ items are the nice-to-have but not essential for your job or living, so this list has items that can be purchased later from savings.

Once you know how much money you need to live on, set a budget, and stick to it. You’ll be pleasantly surprised how quickly you can form new habits and with savings, you’ll have more confidence and know you’ve covered for unexpected events without needing to go into debt.

Aim to live within 90% of your take-home salary, so you’ll always be saving at least 10% of your wage. 🙂

Improve Your Credit Score

We all need a good credit score to secure business and property loans. When your credit history is poor, the loans with lower interest rates are unavailable as you’re a higher risk to the lender. So it’s essential to have an excellent credit score and then plan how to improve it. Similarly, paying down debt like student loans will raise your credit score.

Review your score periodically to know it is moving in the right direction. If it stops improving or even starts declining despite your best efforts to raise it, find out what’s doing it. You could be a victim of identity theft, and if you own a credit card, check your statements regularly. Using your card assists in creating a credit score; however, pay the balance every month to avoid interest payments and indebtedness.

Savings Accounts

If you take the time to transfer money from your regular bank account over to a savings account, you are less likely to use it, and now you’ve got a working budget and set up an autopayment of 10% of your wage to your savings account and watch how quickly it grows. The more money you accumulate in this special account, the better prepared you will be down the road when unexpected expenses pop up too.

On the day you are paid, move any excess money in your account to your savings account. While it may not all stay there – some of it will, and the savings habit will set you up for what you want to buy later.

When you have accumulated a sizeable fund in your savings account, you can look at locking it in for terms that offer higher interest, use it for a home deposit, or purchase shares. With money, there are many options to invest it wisely, so it works hard to earn a return on investment. It’s not hard to see how starting small can help you decades later when you retire.


When you’ve got a ‘savings mentality,’ your focus is on saving and investing. The budget gets you into the habit of discipline and avoiding ‘peer pressure’ to socialize too often or buy the latest gadget.

There are many ways to trim your expenses so you do not go over budget. Learn to resist the urge to purchase an item simply because you want it and save money. By paying for as much as possible with cash, you can avoid incurring additional credit card debt and strive for a better financial future.

Pay Off Debt

Living debt-free may seem like an impossible dream, particularly when you’re just starting out in your career, but it is achievable. Paying down debt and saving is the priority.  The spending comes later when you’ve got money to spend!

By developing good financial habits, you can set yourself up for financial security and retire on your terms. These five habits can help you learn to live within your means and be in control of your life and financial position.