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6 Essential Habits of Financially Healthy People

Ever wish you had more financial success? Laura reviews six key habits of financially healthy people that you can use to transform your life and create a more secure, happy future.

By
Laura Adams, MBA
8-minute read
Episode #432

Habit #3: Financially healthy people align their values with spending.

Successful people know that money is a tool that can either enslave you or give you freedom. They know that we have limited financial resources, so every cent is valuable.

If I reviewed how you spent money over the past 30 days, I could tell you exactly what you value. Is it clothes, nights out with friends, and fast food? Or do you value paying down high-rate debt, saving for a vacation, or investing for retirement? You get my drift.

Values are the things you believe are most important. They influence the way you live, work, and relate to other people. Only you know what your values are—like family, community, health, learning, self-reliance, faith, generosity, patriotism, creativity, or ambition—and they can change over time.

Getting clear about your priorities is so powerful because it turbocharges your financial will power. Every action you take, including your spending, either builds up or breaks down your values. When your financial life doesn’t align with your core values, you know it deep down in your soul and feel unhappy.

Getting clear about your priorities is so powerful because it turbocharges your financial will power. Every action you take, including your spending, either builds up or breaks down your values. 

So, don’t be influenced by what other people spend money on. Identify your values and closely align your financial life with them. Cut back in areas that don’t give you lasting fulfillment so you have more money to achieve meaningful goals and financial satisfaction.

Habit #4: Financially healthy people automate financial goals early.

Since it's easy to go off the financial rails, we have to anticipate our imperfections and create solutions that keep good habits on track. In other words, you have to outsmart yourself when it comes to your money.

Financially healthy people protect their goals by putting them on autopilot as quickly as possible. Here are some ways to automate your finances:

  • Participate in a retirement plan at work, such as a 401k, 403b, or 457 plan. They work so well because contributions must come out of your paycheck before you ever see they money.
  • Set up recurring transfers from your bank account to a traditional or Roth IRA.
  • Open up a 529 savings plan to pay future college expenses for yourself or a family member.
  • Use direct deposit for savings by having a portion of your paycheck, benefits, or tax refund sent to a bank savings account. By the way, this is a great strategy to build your emergency fund or to save for short-term goals like holiday gifts or a vacation.

The earlier you start saving and investing, the more financial security you and your family will have. You’re never too young to begin planning for your future.

Did you know that there’s no age restriction on having a traditional or Roth IRA? Even teenagers who get their first job can have one. Let’s say you earn $3,000 working a summer job. That qualifies you to contribute up to $3,000 in either type of IRA.

If you invested just $3,000 per year or $250 per month from age 15 to 65 (or over any 50 year period) with an average moderate 6% return, you’d amass $1 million dollars to spend in retirement. Investing even small amounts pays off when you start early.

See also: How to Invest Money in Your IRA or 401k Retirement Account

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About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.