by Habits are a funny thing. You can have good habits that propel you to greater health, success, happiness or you can have habits that hamper your health, cause you to struggle financially, and even contribute to depression. As we are focused on financial wellness we thought it best to address habits that can help you achieve greater success financially.
Now before you think that this is going to be a post about cutting coupons or eliminating your favorite coffee don’t worry. Habits differ for each person and our objective in sharing about different habits is to give you a way of looking at your habits and adjusting them to help you enjoy the financial success you have envisioned.
Spending Oriented Habits
Spending oriented habits are those activities where you spend on a regular basis. Now this is not to be confused with spending that is mandatory such as gas or food, this is referring to those spending activities which are optional.
Take for example one of the most common habits that has been addressed online, on podcasts, mocked on memes…the Starbucks habit. Now the popular advice would be to simply ditch your purchases at Starbucks. Afterall, the logic goes, if you are spending ~$2+ dollars a day, x5 times a week then you could be saving $50+ dollars a month. Do that for an entire year and you can be $600+ in the positive…sounds great, right?
While eliminating a spending habit such as Starbucks sounds like a great way to save the reality is that you are unlikely to stick with it. We would say that when you look at your spending oriented habits it is unrealistic to think that you are going to eliminate them entirely. Instead of trying to eliminate the spending habit, try making an adjustment that allows you to keep up the enjoyment but realize savings. For example if you love Starbucks consider the following adjustments:
- Starbucks 2x a week: $2+ each visit
- At home Keurig Starbucks 3x a week: .63-.71 a serving
While this might be a small change you can still end up realizing $10-$15 a month in savings that can contribute to your goal of finding at least $50 a month in savings.
Automated Investing to Create a Savings Habit
Starting a savings habit is one of the more difficult for those new to financial wellness to start. Of course when it comes to creating a savings habit there is nothing finer than setting up a habit that allows you to be successful…even if you forget. If you have struggled with building up your savings then we invite you to consider setting up an automated savings plan. If you are just getting going with automated investing the amount isn’t important, it is more important to simply start.
For many people starting an automated investing plan seems foreign but oddly it seems perfectly normal to have Netflix, Apple Music, Disney+, etc. hit your card. When you have the psychology that investing is a form of reward (to your future self) then it will be much easier to start and continue an automated investing plan.
Savings from Spending
Changing your habits can be a challenge and we understand that. What if, instead of changing a spending habit, that you could save while you continue to spend? While we certainly would recommend looking at your spending there are apps that allow you to start the journey of saving or even investing while you spend. Consider a few of the following apps to help transform your spending habit into one that gets you closer to financial freedom.
- Acorn – https://www.acorns.com/pricing/ – While acorn does have a checking account as an option the focus of their app is that of investment. Instead of some applications that are free Acorn starts at $1 per month for their platform. The unique aspect about Acorn is that it focuses on investments from your spare change which gives you a greater chance to grow as you spend.
- Guac – https://www.guacapp.com/ – Guac is an app that gets tied to your checking account and helps you save a set percentage of your spending for specific goals. For example you could set your savings percentage at 10% and you spend $100 then it would send $10 to your Guac account. Being able to set a goal and a % is a great way to build up savings.
- BofA – Keep the Change – We started with BofA prior to going to USC and have kept them to this day. One program they have, that is tied to your Debit Card, is called Keep the Change. The Keep the Change program rounds up to the nearest dollar on transactions from your Debit Card and puts it into your savings account. If you are accustomed to using your debit card on a regular basis this is a great way to start building up your savings.
Whether you change your spending habit, start automated investing, or even start saving with your existing spending the key is to start. It can be tough to start, but select a strategy that works best for you and stick with it.
