November 12, 2024

When it comes to money, it isn’t how much you make; it’s how you manage what you make. Whether you’re starting your first job, eyeing retirement, or somewhere in between, these five financial habits can help you reduce money stress, build wealth, and reach your long-term goals. Be warned though… these aren’t quick fixes. But, if you stick with them, you’ll be amazed at how they can positively affect your financial future.

1. Pay Yourself First

Set up automatic transfers to build your emergency and retirement funds. Set up a recurring transfer from your checking account to a savings account for emergencies with a goal to save enough to cover three months living expenses. Then, enroll in your workplace retirement plan. If your employer offers a retirement savings match, aim to contribute enough to earn all that “free money” for your future retired self! Remember, even small, consistent contributions can grow significantly over time. Start small and increase your savings rates over time.

2. Cut Back on Impulse Purchases

Late-night online shopping scrolls might give you short-term satisfaction but that package that lands on your doorstep a few days later won’t get you closer to your money goals. Reduce impulse purchases by setting a “contemplation period” before you checkout. Instead of purchasing immediately, add items to a wish list or keep them in your online cart. Come back in a day or two and see if you still feel the same way about the purchase.

3. Track Your Spending

Unless you have a money tree in the backyard, you’ll need to be intentional about where your money goes. Keep track of every dollar spent using a budgeting app, a spreadsheet or good old-fashioned paper and pen. Then review where the money went. Odds are you’ll find places to reduce or cut your spending so you can direct dollars to more fulfilling goals.

4. Check Your Credit Report

Your credit score affects everything from loan approval to interest rates, so it’s a major factor in your financial life. Make it a habit to check your credit report regularly to catch errors and find ways to improve your score. Visit www.annualcreditreport.com to request a free credit report annually from the three major reporting bureaus. Or, better yet, set a reminder to request one report from each agency every four months to monitor your credit year-round. Be on the lookout for – inaccurate balances, incorrect late payment reports or unknown accounts which could indicate identity theft.

5. Stick with It!

It’s not always fun or easy to stick to a financial plan, but consistency and discipline will help you avoid derailing your financial plans for that “once a year” sale. Start by setting clear, achievable goals posted in place you’ll see them often. Break larger goals into smaller, manageable steps. If you want to save $5,000 for an emergency fund, for instance, set monthly or weekly savings targets. Create accountability by sharing your goals with a trusted friend or family member. When you’re feeling discouraged or tempted, remind yourself that your long-term financial success is worth it.

Developing strong financial habits is a marathon, not a sprint. It’s about making small, smart choices every day. It requires patience, persistence, and a willingness to learn from both successes and setbacks. And remember, you’re never alone with Align. We’re here to help you reach your goals!