50 Good Personal Finance Habits Everyone Should Follow

I have a lot of bad habits. For example, I tend to bite my nails when I get stressed out. I also have a penchant for opening the cupboard to get a drinking glass — then walking away and leaving the door wide open. I know. I can’t explain it either, but it drives the Honeybee absolutely bonkers every time I do it.

Even so, I like to remind her that I have a lot of good habits too; perhaps not coincidentally, many of them are related to personal finance.

Hopefully, you have a lot of good personal finance habits too. How many of these apply to you?

1. Taking advantage of your employer’s flexible spending account. These accounts not only reduce your tax liability, but they also act as a de facto quasi-savings plan.

2. Tracking your income and expenses.

3. Being careful not to overspend on gifts.

4. Paying attention to mortgage interest rates — even after you buy a home. People who fail to do this may miss out on refinance opportunities that could save them tens of thousands of dollars over the life of their loan.

5. Never buying anything on impulse. One of the best ways to help prevent this is to make a shopping list and then stick to it.

6. Opening your bills when you get them.

7. Paying your bills online when possible.

8. Doing your research before purchasing extended warranties.

9. Ignoring credit card convenience checks that come in the mail. They usually come with high fees that make them extremely expensive.

10. Saving part of your income for retirement. Try saving at least 10 percent from every paycheck; it’s never too late to start.

11. Keeping the money in your wallet to a minimum.

12. Spending less than you earn every month. File this one under “D” for “Duh!”

13. Having an exit strategy when investing. Without one, it is tough to recognize the right time to cut your losses — or take profits off the table.

14. Never assuming past performance guarantees future results.

15. Taking advantage of automatic paycheck deductions. Not only does it ensure you pay yourself first, it’s an easy and painless way to save for retirement.

16. Reading all contracts before signing on the dotted line.

17. Planning your dinner menus in advance. We do this at my house because it’s an extremely effective way to reduce our monthly food expenses.

18. Reviewing your credit card statements for errors and erroneous charges.

19. Keeping a budget. Because for most folks, when it comes to managing their money, failing to plan is the same as planning to fail.

20. Faithfully following your budget. It’s one thing to create a budget, but if you don’t have the discipline to put it into action, why bother?

21. Increasing your 401(k) contributions every time you get a raise.

22. Properly maintaining your car. By following your car’s maintenance schedule and paying a little up front, you’ll reduce the risk of encountering more costly major issues down the road.

23. Paying the bills on time. By doing so you’ll avoid spending money on needless late fees.

24. Taking advantage of coupons and internet promotional codes as often as possible.

25. Refusing to pay the minimum on your credit card bills each month. Here’s a credit card fact: making minimum payments each month will ensure you pay the maximum interest.

26. Using your credit card to buy things only if you can pay it off in full at the end of each month.

27. Leveraging “good debt” to purchase things that have the possibility of increasing in value, or providing a path to a higher income in the future.

28. Never hoping for an inheritance to solve your money problems.

29. Avoiding the use of payday loans to cover temporary financial shortfalls. Eliminate monthly shortfalls by following a budget and maintaining an emergency fund.

30. Not relying on Social Security as your primary source of retirement income.

31. Avoiding the lottery. There is a reason why the lottery is known as the Stupid Tax.

32. Setting, and then regularly reviewing and updating your savings goals.

33. Never overpaying for insurance. For example, why pay the higher auto insurance premiums for low deductibles if you rarely make claims?

34. Resiting the urge to float checks right before payday. Today, faster bank processing makes this practice much more risky than it used to be.

35. Fully understanding stocks and other financial instruments before investing in them.

36. Avoiding cigarettes. This expensive habit is one of the Four Horsemen of personal finance.

37. Avoiding wasted time clipping coupons you’ll never use.

38. Ignoring the temptation to keep up with the Joneses.

39. Buying a new car — or better yet, a newer used car — and keeping it for at least ten years. Buying new cars is costly because they can lose upwards of half their value by the time they are three years old.

40. Remembering to comparison shop whenever possible.

41. Regularly checking your credit report for errors, signs of fraud and identity theft. You’re entitled to a free credit report from Experian, TransUnion, and Equifax every 12 months — that means with proper planning you can actually get an update every four months!

42. Optimizing your 401(k) account every year. Diversifying and balancing your allocations will minimize your losses in the event of a major market downturn.

43. Negotiating whenever the opportunity presents itself.

44. Ensuring your retirement needs are taken care of prior to providing for your children’s future. What good is saving for the kids’ college education if you’ll be eating cat food in your golden years?

45. Avoiding frugality as a means to achieve prosperity. You can only free up so much money by cutting expenses.

46. Occasionally rewarding yourself by splurging.

47. Maintaining an emergency fund. Everyone should have between three and six months of living expenses in the bank.

48. Resisting the urge to tap your emergency fund for non-emergencies.

49. Avoiding interest payments whenever possible.

50. Treating your household like a business. By taking an active role in managing your finances — and looking at ways to maximize your income — you’ll ensure a brighter financial future for you and your family. Who knows; maybe you’ll even stop biting your nails.

Photo Credit: roland


    • 2

      Len Penzo says

      I’ve been trying to convince the Honeybee do start more online bill paying, but she still prefers snail mail. Old habits die hard.

  1. 3


    I go with #11 a little too much unfortunately. I always have very little money in my wallet. I have a checking account that reimburses all the ATM fees, so I don’t have an excuse to not have $20 at least all the time. I should change that.

  2. 8

    Cemlyn Jones says

    Hi Len. I’m @krantcents here. Bank fees !! Have you done one of your features on bank fees? In my country they charge $50 for sending out a letter. It’s from a word processor !! humans don’t even have to click on anything, the computer does it all by itself and thy charge 50$, bloody hell it only takes a fraction of a second.

    A few years ago I needed a lawyer but I was in a different country so I needed one thatwould do everything by email. I found one, very helpful and cheery. So the emails flowed. Every time I wrote I got a reply. If I asked 2 questions I got a reply for each. At the end of the 1st 3 months knew why!!

    $10 for reading an email,
    $15 – $25 (depending on length) for writing an email.

    I would write an email with 2 question, they would read it ($10), they would prepare 2 replies ($30). In almost all cases I was polite and said “thank you” ($20) for reading the “thank you”. One simple exchange and $60 already. In a period of 3 months we had exchanged over a hundred emails (divorce and settlement of financial affairs). In 3 months I had ran up a bill of over $10,000 for simple correspondence charges !!

    Grrr!! I hate banks, lawyers and accountants. They are all for the hole !!

  3. 9


    I love these lists because I like to see how many I actually do. I think the two areas I’m weak, is that I do overspend on gifts during Xmas and I also am way too lazy with my investments. I invest every pay period but I don’t rebalance in any kind of regular frequency and I don’t have an exit strategy. Overall, I’ll give myself an A-.

    • 10

      Len Penzo says

      I think I would give myself an A- too. There are probably four or five items on this list I can’t take credit for regularly doing: 19,24, 35, and 41.

  4. 11

    edward says

    * if one is “Tracking your income and expenses”, “Being careful not to overspend …”, “Keeping a budget”, and “Never buying anything on impulse”,
    then why would one want to be “Taking advantage of coupons and internet promotional codes as often as possible.”
    that seems like non-essential spending.
    Esp. when one should be “Avoiding wasted time clipping coupons you’ll never use.”
    How about amending it to “taking advantage …. when purchasing things you really need.”

    * Ignoring credit card convenience checks that come in the mail. They usually come with high fees that make them extremely expensive.
    the offers i get are 0% or 1% for 9-12 months w/ only 3% fee. pretty good deal to pay off higher interest revolving debt [including cars].

    * Keeping the money in your wallet to a minimum
    Why?? so one doesnt overspend, get robbed, be tempted to blow it on frivolous things??

    * so, if one “Avoiding the lottery. There is a reason why the lottery is known as the Stupid Tax.” does that mean one should avoid going to casinos??

    * Avoiding frugality as a means to achieve prosperity. You can only free up so much money by cutting expenses.
    wish the republicans in congress would follow this one!!!!!
    if the USA were a business, dont you think the CEO would be looking for ways to increase the “above the line” [revenue]???

    • 12

      Len Penzo says

      I’ll take your questions in order, edward:

      1) Are you suggesting coupons and promo codes can only be used for non-essential spending? That’s clearly not true. And even if you are splurging, doesn’t it make sense to use coupons whenever possible? :-)

      2) One missed payment or another payment blunder and there goes any savings you might have secured. No thank you. Keep in mind, unlike credit cards, those “convenience checks” accrue finance charges from the first day you use them. So you’re not only agreeing to pay a convenience fee upfront, but you’re also paying interest on the fee — which is a double whammy. They also tend to have other “gotchas” too.

      3) Yes.

      4) I rarely gamble at casinos but, when I do, I do it purely for entertainment and under no delusions that I am going to “strike it rich.” I take a set gambling bankroll — usually between $300 and $400 — and if/when it’s gone, I go home. That being said, folks who have trouble controlling themselves should stay away from the casinos.

      5) Ha, that’s s good one — but a very poor analogy, edward. You do realize that the federal government has a spending problem, not a revenue problem, right? You also realize that if we taxed everyone 100%, it wouldn’t begin to put a dent in the national debt?

      • 13

        John says

        I think this person is referring to the promotional offers. They are usually interest free for 1 year to 18 months. You only pay the 3 or 4% up front. There are no other fees unless you don’t pay back the debt within the time frame specified. This is a great tool to pay off high interest debt. Unless of course you cannot pay it back within the time frame then you are charged back interest and back to your normal interest rate which defeats the purpose. I have done it a few times which help me become debt free.

  5. 14


    I am most guilty of: “Never hoping for an inheritance to solve your money problems.”

    To maintain personal finance and keeping within a disposable interest budget I take out a moderate amount of cash each week – and stick too it, allowing for the ocassional bought lunch or extra gas costs, but not enough to spend willingly on uneccesary extras. This helps to be aware of how much you are spending, and finances that have gone unspent that week can go into a small savings fund for luxuries.

  6. 15


    My 2 favorite ways of establishing fairly good finance habits are:

    1. Setting up automatic bill pay. Really takes care of everything without any hassle.

    2. Only using cash. I know it seems a little far fetched, but I really have started to limit my debit/credit card purchases and now only use cash. This restricts many impulse buys and has been effective for me so far.

    Thanks for the article.

  7. 16

    Sandy Sawyer says

    I get an A on the list…everything that applies to me, I do! PLUS…I put as much spending as possible on my reward credit cards, which I pay off completely each month, and earn a few hundred few dollars a year. It’s as good as a part-time job, having added up to several thousand dollars over the years. One word of advice to the youngsters: when doing your retirement planning, take more than supplemental-to-Medicare insurance into consideration regarding medical needs. Dental costs increase greatly as you age, and most dental insurance policies don’t cover a fraction (if any) of periodontal treatment, implants, etc. Also important: hearing aids cost $3000 and up, each, and the best medical plans might pay as much as $500 toward them. OLD AGE IS EXPENSIVE, so prepare for that as much as any other retirement expense! (Sadly, I speak from experience!)


Leave a Reply

Your email address will not be published. Required fields are marked *