Article 7 financial habits you could adopt

Don’t feel like you have to wait for a new year or month to set yourself some new goals – particularly when it comes to your finances. You can start at anytime. By putting off the ‘I’ll start next week’ mentality and adopting some financial habits right now, you could stand a greater chance of reaching short-term goals, which could then help get you on the path to achieving your long-term financial goals as well.

This article outlines some financial habits you could adopt and a few tips to stay on track to support you on your financial wellbeing journey.

Create a financial plan

Before you start forging new habits, it’s important to know what you’re aiming for, and why. Start by making a list of your short and long-term goals – perhaps you’re saving towards your wedding, have a once-in-a-lifetime trip planned or want to buy your first home. You could even be thinking about early retirement or buying an investment property in a few years’ time.

Whatever your goals may be, having them clearly laid out in front of you can be a great way to get motivated.According to our financial wellbeing research, people who write out a financial plan save more regularly and do better financially.¹ To help you get started, check out our guide to creating your 100-year financial life plan and finding joy in living within your means.

Discover financial habits you could try out

Now you know what you’re aiming for, it’s time to set that plan in motion. Here are some financial habits you could adopt to help you reach your goals. What’s right for you will depend on your own personal circumstances.

Improve your financial knowledge

Improving your financial literacy can be a great way to meet your goals, as you’ll have a greater understanding of how to achieve them. You could start by keeping up to date with financial news, and from there, you could use free tools and resources to enhance your learning. Our financial wellbeing tool is a handy place to start.

Review your budget

Effective budgeting can be a good way to get a handle on your finances, but there’s more to it than choosing the right budgeting method. You’ll ideally want to review your budget on a regular basis, checking your expenditure and seeing if you can reduce any unnecessary expenses. You could even set a monthly or quarterly calendar reminder to really get in the habit. Read our article for tips on how to review your budget.

Put your savings away

Think about where you’d like to put your savings. You might decide to open separate savings accounts or set up different savings pots through your main bank account. Different providers allow you to automate your savings, or you could take advantage of a dedicated savings app. For example, some allow you to round up purchases and save the change, while others analyse how much you can save and automatically transfer it. Don’t worry if you can’t commit to saving huge amounts. Saving small amounts each month can soon add up. Read our article that explores the benefits of saving £50 a month.

If investing is something you’re considering, be aware that investments can fall as well as rise and isn’t guaranteed. You may get back less than you invest. You can find out more about investing and its risks on MoneyHelpers’s beginners guide to investing. Or if you prefer, consider speaking to a financial adviser who can take you through your options. You can find an adviser through MoneyHelper. There may be a charge for this.

Pay down debt

Paying down your debt – particularly if you have outstanding gas and electric bills – might be where you consider starting. By doing so you might be able to put some savings into a separate savings account to help you reach your goals. Depending on your personal circumstances, you might be wondering whether to save or pay down debt. You can find out more in our article should you prioritise saving or paying down debt.

Build an emergency fund

Having an emergency fund can provide a financial buffer to cope with the unexpected. For example, unexpected illness, redundancy or even house repairs. It may not directly help you achieve your goals, but it can ensure that any financial blows have a lesser chance of derailing your future goals. To help, here are five steps to build a healthy emergency fund.

Commit to saving into your pension

Saving into your pension could give your savings a boost and possibly improve your standard of living in retirement. If you can commit to saving a certain amount each month it could soon become second-nature. If you need a kick-start, here are a few ways you might be able to boost your contributions. Remember, the value of an investment can fall as well as rise and isn’t guaranteed. The value of your pension pot when you come to take benefits may be less than has been paid in.

Stay on track

Embracing new financial habits may seem overwhelming at first, but try to stick with them. It’s important to be consistent. If you start now, you could soon be ticking off some of your goals. Here are a few tips to help you stay on track:

1. Start small and utilise any additional resources that you can, from online tools to savings apps. If you want to ease in, our article, 3 simple steps to help you hit your savings goals, takes you through some easy first steps
2. Regularly check in with your progress, whether that’s reviewing your pension/investment performance, analysing your budget or checking your savings balance.
3. Reward yourself once you reach your goals, or even when you’re part-way there, to encourage you to stick to your new habit.
4. Don’t be put off by setbacks. Things happen, and there will undoubtedly be months where you don’t save as much as you’d like, or you fall behind with your budget review. Take time to work on your financial resilience and you’ll soon be able to bounce back. For more information on this, read our article improving your bouncebackability: 5 tips to boost your financial resilience.