10 Money Habits to Change Your Life

Jan 11, 2020

Making the decision to improve your money situation and set your future up for success is fantastic. I won’t lie, it is easy to make the decision, but it can take quite a long time to feel comfortable with new money habits.

This guide will help get you started and keep you on track to financial independence. It will take hard work, perseverance and sacrifice but starting right now will set you up long term.

I have started this list and am still working on some of these points over 2 years later.

Ready to start on your journey? Let’s build these 10 money habits together.

Credit Cards

The first item on your to-do list should absolutely be sorting out your credit card debt. I am not trying to trash credit cards right out the gate. I have one myself.

Credit cards are great for certain things:

  • Can be used for emergencies
  • Reward and travel points (certainly better in the US)
  • Getting and increasing your credit score*

*In order to increase your credit score with credit cards, you need to pay on time. If you miss payments or only pay partial amounts, it can negatively affect your credit score.

It is easy to apply for a credit card, but just because you get approved, doesn’t mean you should have a credit card. They come with high interest charges, in fact, in Ireland, some companies can charge higher than 20% interest on your credit card balance.

The problem lies with people as well. A lot of people rely too heavily on credit cards, and buy things they can’t afford or will not be able to repay in a timely manner.



Money Habit 1: Avoid large purchases on credit cards and pay down any balance quickly so you aren’t charged ridiculous interest.



Ireland is fantastic from a student loan point of you. Most people graduate with little to no debt. On the other hand, people spend far too much for cars or constantly replace ones with the newest models.

Most people don’t calculate the monthly repayments or the interest charges, then get a bit of a shock when they are struggling to afford the loan each month.

While the interest on most loans aren’t as high as that on credit cards, it is still money down the drain. Initially, paying off extra principle on a loan can be tough but whenever you get a raise or extra income, some of this should be ear marked for extra loan payments. Or look at increasing you saving and help pay of these liabilities as fast as possible.



Money Habit 2: Focus on paying off all loans as fast as possible, starting with the highest interest rate ones first.



Track Net Worth

Keeping tabs on your net worth can be daunting in the early days, especially when it is a negative value.

Despite this, it is a great way to develop a positive attitude towards money and create good habits. It can be hugely motivating watching your debt disappear or even seeing your net worth grow into figures you couldn’t have dreamed of when you started out.

How do you calculate your net worth? Very simple.

Net Worth = Assets – Liabilities

Assets are what you own such as investments, cash, your house, etc. While liabilities are what you owe like any debt including credit cards or overdrafts. 



Money Habit 3: Calculate and track your net worth. 



Review Expenses

Improving your financial situation is not only about forming good habit, but also breaking bad ones.

It is important to see the full picture of your finances. Most people know exactly what is coming into their account each month but very few know exactly what they are spending.

Something I do at the end of each month is track my expenses and see what categories I am overspending on and where I could cut back. It would be impossible to break my bad habit spending when I don’t even know what they are so I think it is an important thing for everyone to do regularly.

Income and expenses are rarely static so making a budget and not reviewing it seems futile. 



Money Habit 4: Track and review your monthly expense often and make adjustments as you can see fit. 



Have a plan

Making a savings plan is paramount to securing your financial future. It ties in very nicely with the previous money habit. You can’t create a savings plan without knowing your monthly expenses and income.

First up are the necessary expenses: bills, loan repayments, grocery shopping. Once you have calculated this total, take it away from your income to be left with the money for discretionary spending and more importantly, savings. 



Money Habit 5: Plan how much you can put away each month and stick to that plan.



Limit Discretionary Spending


We have all heard the phrase “Keeping up with the Jones’.” It is the idea that we see how our friends and neighbours spend and we try to match or out do them to create the visage of success.

In fact, it has become such a problem in society because it has led so many people into financial difficulty by living beyond their means.

Ignore everyone about you. It doesn’t matter what material possessions people have. By removing the temptation to spend frivolously, you will increase the money available to save each month.

This can be hard to do. Start by asking yourself if buying something will make you happy or are you just doing it to appear a certain way for other people. It can really help you stifle those impulses.



Money Habit 6: Don’t keep up with the Jones’ 



Spend Time Learning

In order to create the best relationship with money and your finances, you should set aside some time every week to learn check up on your own finances and learn about personal finance in general.

Spending time on your own finances each week will allow you to consistently reassess your budget, expenses and how your loans and/or investments are doing. That way, you will never be caught of guard by any bills or loan payments.

In addition to that, you should use some time each week to learn about personal finance and how to manage it. This is easily done by reading books, blogs or articles. There is a preconceived notion that finance is a difficult topic when in fact personal finance is quite straight forward. 



Money Habit 7: Dedicate time every week to learn about your own finances and personal finance in



Focus on Savings Rate

Forget about how much you are saving. The monetary amount is not the important measure to rely on. Savings rate is a better tracking mechanism for financial independence that I discuss in more detail in a previous article

Person A earns 40k a year and saves 20k giving them a savings rate of 50% while person B earns 100k a year and saves 20k meaning a savings rate of 20%.

Clearly person A will be in a much stronger financial position. They are saving a years worth of expenses each year and will be able to retire much earlier. Person B is saving the same monetary amount but only a quarter of their yearly expense. 



Money Habit 8: Track your savings rate – increasing your rate is more significant than trying to the monetary number.



Avoid Lifestyle Inflation

Lifestyle inflation is increasing your spending as your income rises. This is a hugely common phenomenon and one of the biggest reasons why people do not have any savings. It is similar to “Keeping up with the Jones’” except lifestyle creep is more of a passive effect while the Jones’ is active decision making.

At some point in your career, you will likely receive and/or bonus. Now you have a little extra money coming in each month, so before the lifestyle inflation creeps in, why not siphon off this extra pay and increase your savings or pay down any loans.



Money Habit 9: Keep that lifestyle inflation in check or reel it back in.



Learn from your mistakes

This is the final money habit that I have incorporated into my life. Everyone is flawed and invariably, we will all make a mistake, including financial ones. But you need to admit to and own these mistakes.

If you ignore your money mistakes, then likely these mistakes will snowball, and you can get into a bad situation. You spend too much on a credit card, you take out too big a loan for an unnecessarily flashy car, make a bad investment.

It doesn’t matter what the mistake: Recognize it. Accept it. Correct it.



Money Habit 10: Learn from your money mistakes. 


Create Good Money Habits

These 10 habits are what have worked for me and hopefully will work for others. It is a great starting point and a scaffolding to build your own finances. No need t change everything all in one day, but not starting today would be a mistake. What habits do you have, good or bad?

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