• About
  • Mortgage Basics
  • $40K Challenge
  • Aunt Doris
  • Grandfather Says
  • Privacy
  • Archives

Len Penzo dot Com

The offbeat personal finance blog for responsible people.

6 Good Habits You Can Employ to Improve Your Finances

By Anum Yoon

Did you make a new year’s resolution to improve your finances this year? Fortunately, it only takes a few good habits to meet that noble goal. Even better, most good financial habits are so easy to implement that it’s just a matter of getting started.

Here’s a list of the best good habits that will improve your finances:

Set Specific Financial Goals

Clarity of mind is a good habit; you need to know what your financial goals are.

It’s all well and good to think “spend less, save more,” but any financial improvement plan will be easier to do if you have a specific financial goal in mind. Do you want to save for a fantastic summer vacation? A larger home? Furniture that’s been on your wish list? A new car? Mad money?

The day will likely come when you’ll want to spend more than you should. Say you go out with friends and everyone is sampling the trendiest new food. It’s not easy to rein in your spending in a situation like that. But it’s much easier if you think to yourself: This $13.50 goes in the X fund if I don’t spend it. The “X fund” is your goal.

Monitor Your Spending

Many people plan to spend less as a road to improving their finances — but you can’t plan to spend less unless you know what life in general is costing you, which is why it’s important to record your purchases. Use a comfortable method; you can carry around a pocket notebook or use a smartphone app, such as Mint or You Need a Budget.

Monitoring your spending will give you a clear sense of what those necessities cost each month. However, you’ll also need to know what you spend on discretionary items, such as clothing, restaurants and travel — and if you need to cut expenditures, these are the first categories you should choose from.

It’s also possible that you may be underspending. If you haven’t bought new clothes in a while, your wardrobe may need refurbishment!

Develop a Budget

Once you’ve monitored your spending for a few weeks, it’s time to create a budget! Now, don’t take the word “budget” to mean you’ll take a bare-bones approach to everything, never spending a dime more than you need; being sensible is a good habit — and a sensible budget accounts for both needs and wants.

Consider creating a household strategic plan. Create a spreadsheet or chart of how much you spend, from your monitoring of expenses. Create the categories based on your spending habits. For example, if you spend $4.65 on coffee every day, then create a “coffee” category. If you get groceries once a week, create a “groceries” category.

Tally up how much you spend. If you have a good balance between how much you earn and your expenditures, great! If you never have any money left over, then you’ll need to cut back in certain categories. If you spend $400 on groceries per month, for example, see if you can trim 10%, or $40. The first several months of budgeting is your opportunity for refining and tweaking your initial plan.

Plan Spending Ahead of Time

Many people spend too much because they have no plan.

One good habit is to strategize your spending. If you have a date for Friday night at a local eatery, for example, look at the menu beforehand, think about what you’re going to get and know how much it will cost. That way, you won’t be horrified when the bill comes.

Pay Down Debt

Being debt-free is a good habit. Credit card debt, especially, can end up costing you much more than you initially borrowed because of the interest rates.

If you have credit card debt, check around to find the lowest annual percentage rate (APR) you can find, which lenders are required to disclose. Try to consolidate your debt with the lowest rate, so you pay as little interest as possible.

Save Each Month

Saving is a good habit all by itself! If you currently save, then use your budget to establish the most prudent amount to save per month.

If you don’t have a savings account, then open one! Figure out how much you can save per month by monitoring your expenses. Even if it’s only $5 per month, start now; savings pay interest. Over time, the interest will work for you.

By following these six habits, you’ll improve your finances and establish a firm foundation for good financial health for a lifetime.

***

Anum Yoon is the personal finance blogger who started and maintains Current on Currency. You can catch her on Twitter to follow her updates.

Photo Credit: roland

3 Comments March 9, 2021

Comments

  1. 1

    Lauren P. says

    Nice article; my husband and I have followed these principles and are now (finally) debt free! I might add to be sure and include some money for play in the budget. My husband and I each allow ourselves a few dollars each month (like $5 to $25) to spend free and clear w/o repercussions. Made saving AND budgeting much more palatable.

    Reply
  2. 2

    George says

    I use kMyMoney to track how I spend my money. After a few weeks, I was surprised I could see the “big picture” on how my money was being spent
    and wasted!

    It is easy to adjust after that so I recommend you to give it a try.

    My 0.02.

    Reply

Trackbacks

  1. Black Coffee: The Idiot Lights Are Flashing Red – Len Penzo dot Com says:
    March 24, 2018 at 8:03 am

    […] 6 Good Habits You Can Employ to Improve Your Finances […]

    Reply

Leave a Reply Cancel reply

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

This site uses Akismet to reduce spam. Learn how your comment data is processed.

The Question of the Week:

Do you think the US will eventually return to some form of gold standard?

View Results

Loading ... Loading ...

Recent Posts

  • Black Coffee: Red Ink and Green Confetti
  • Money Issues Ruining Your Relationship? Here Are 5 Ways To Fix Them
  • Filling Out the 1040 Form: Key Points to Know
  • How to Use Line Shopping as a Financial Tool When Betting on Sports
  • Grandfather Says: Eulogy for a Friend
  • How to Financially Prepare for a Divorce
  • Behold the $100,000 Hamburger!
  • Should You Diversify Your Portfolio With Crypto? 3 Pros and Cons
  • 3 Mistakes to Avoid When Starting Out as an Investor
  • 5 Investment Strategies To Help You Save For Retirement

Disclaimer

This site is for informational and entertainment purposes only, and the content herein should not be mistaken for professional financial advice. In fact, making investment decisions based on information published here, or any other website for that matter, is more than unwise; it is folly. This website accepts advertising in the form of monetary and other compensation; as such, topics of discussion are occasionally influenced by these advertisers. Sometimes, an article may also include affiliate links, meaning, at no additional cost to you, this blog earns a commission if you click through and make a purchase (for example, as an Amazon Associate I earn from qualifying purchases). Remember, you and you alone are responsible for the decisions you make in life, so please contact an independent financial professional for advice regarding your unique personal situation.

Sign up for the weekly Len Penzo dot Com newsletter
Len Penzo dot Com Delivered Weekly
Join more than 30,000 readers and fans who enjoy personal finance and macroeconomics with an offbeat twist!
Invalid email address
Thanks for subscribing!

Popular Now:

  1. 1. The 7 Most Popular Ways to Commit Financial Suicide
  2. 2. 25 Examples of Shrinkflation That No Longer Fool Consumers
  3. 3. The 10 Worst Things I Ever Bought
  4. 4. 7 Perplexing Money Questions Without a Good Answer
  5. 5. My Cola Taste Test: Is Coke Really Better Than Pepsi?
  6. 6. Planning a Wedding? Here Are 9 Ways to Ensure You’ll Pay Too Much
  7. 7. Economic Collapse 101: How to Prepare for Water Supply Disruptions
  8. 8. A Simple Test to Know If It’s Better to Rent or Buy a Home
  9. 9. The Big Secret the Banking Industry Doesn’t Want You to Know
  10. 10. 4 Good Reasons Why Some Quarters Are Painted Red

All-Time Most Popular:

  1. 1. 19 Things Your Suburban Millionaire Neighbor Won’t Tell You
  2. 2. Dear Friend: Here Are 41 Reasons Why I’m NOT Lending You the Money
  3. 3. Why Your Expensive Luxury Car Doesn’t Impress Smart People
  4. 4. If You Can’t Live on $40,000 Annually It’s Your Own Fault
  5. 5. 21 Reasons Why Corner Lots Are for Suckers
  6. 6. 4 Smart Reasons Why College Isn’t for Everyone
  7. 7. 18 Fast Facts About Social Security Numbers
  8. 8. My Ketchup Taste Test: Upset! Guess Which Brand Topped Heinz
  9. 9. Why I Prefer a Spreadsheet to Track Expenses and Manage My Finances
  10. 10. Here’s a Simple Trick for Getting Credit Card Interest Charges Waived

Copyright © 2021 Len Penzo dot Com · All Rights Reserved · Designed by Nuts and Bolts Media

© Len Penzo dot Com 2008–2021