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It’s a new year and a time for reflection about what was good about last year and not so good. Is your financial situation better than it was last year? Maybe worse? Welcome to “25 Habits You Need NOW for Financial Freedom”!
I hear this a lot. Some people have spending problems, others have income issues. But either way, there just doesn’t seem to by enough money to go around. I can’t solve all your financial problems from this end of the computer, but I can share what my husband and I learned when we were in a financial hole years ago.
We hadn’t been married long. I brought a lot of debt into the marriage, and even though I was making pretty good money at the time, most of it went right out the door to bills. Can anyone relate?
My husband and I knew that money and financial issues are one of the main reasons people divorce, and we wanted to get our financial house in order. We read books, took classes and got serious. The steps I’ve outlined for you are some of the things we did.
Our families didn’t always agree with our choices, but they weren’t living our lives, we were. We wanted to have more children, we wanted to travel and buy a nice home, but none of these things were possible until we got out of debt.
It took us 3 1/2 years to pay off every last bit of debt. We were debt free in January 1996. We’ve never gone back to that bondage and we’ve never regretted one single thing we gave up to get here.
If you really want financial independence and resilience, you’ve got to get serious…..really serious. Serious like all you think about all day is saving money. Serious like you talk about it all the time. Serious like you read everything you can, every tip, every blog. Serious like you get up Saturday morning early with your spouse and review the spending for the week.
No one will do this for you, but believe me, it’ll be worth it.
Top 25 Habits You Need for Financial Breakthrough
1. Create and abide by a budget – I’m sorry folks, but this is where it begins. You need to write a budget down on paper, yes, paper. Why? First of all, it’s a place of agreement and accountability. Contracts are written on paper, all important things are documented with paper, and so your family budget needs to be on paper. You and your spouse need to be in agreement about this budget, and believe me, it will be so empowering.
The budget should be placed on the frig or somewhere you can see it everyday. A good budget can take a few months to iron out, you’re going to forget things and need to adjust, but you will only adjust mutually. Everything relating to this budget will be done together or not at all. No cheating, you must stick to it.
2. Get on a cash system – When my husband and I got serious about a budget, we heard about a system called the “Cash Envelope” system. How it works is when you get paid, you bring that cash home and place the designated amounts, according to your budget, in the appropriate envelopes. Everything is paid with cash and when the cash is gone, you are done spending. The envelopes were labeled “Rent”, “Electric”, “Food”, “Christmas”, “Clothes”, etc, you get the idea.
Now, I realize that we live in a digital age and things are different, but the principles aren’t. There are a couple of very nice apps that work around the same system, they are mint.com and everydollar.com. They are both free and very popular. Both apps will keep track of your budget and all of your spending, categorizing all expenditures. But it will only capture what you are willing to give in terms of commitment. Everydollar.com will also sync purchases between you and your spouse’s phones, so you’ll know exactly where your spending is at all times.
3. Give yourself a weekly allowance and stick to it – Decide on a reasonable amount of money, or an “allowance” for each spouse for the week. One spouse’s allowance may well be more than the other one, but the amount is to be based on needs, not wants. For example, when my husband and I were going through this time in our lives, I was at home with our young children all day, but my husband was on the road most of the day in a sales position. Obviously, he needed more gas money than I would need and he needed a budget for food to be able to meet clients. It’s also a good idea to keep all of your receipts for the week for accountability as well as for adjustments that may need to be made.
4. Stop eating out – Period. No eating out. You must break this habit. Basic meal planning is all that is necessary to eat at home. Cooking from scratch will save the most money in the long term. However, if you don’t have much in the way of cooking skills yet, do your best to keep the meals simple and uncomplicated. Stock and use a pantry as well, how to here.
5. Control your use of energy – You are likely paying for energy that isn’t being used. Doing a “Do-It-Yourself Energy Audit” can help you to not only do a better job at minimizing your use of energy, but also help you to see where you are losing precious cooling/heating from your home. Take the time to do this.
I am a maniac with this…lights are off unless being used, clotheslines are used regularly, everything is either unplugged or in an outlet strip that is also turned off unless it’s being used. Showers are kept short and baking is done in bulk to keep from heating up the oven repeatedly.
Find your meter and begin tracking how many kilowatts you’re using each day, pay particular attention to weekends and when the kids are home. We use about 27 kilowatts per day during the week, but when the kids are home all day, it can jump to 40. Be aware of this and train family members to turn lights, curling irons and video consoles OFF and unplug.
6. Entertain yourself at home –Estimates show that Americans spend upwards of 5-10% of their annual incomes on entertainment. Wow. That’s a big number that could be going to pay down debt or to save for long-term goals. Seriously, there are so many ways to entertain yourself for free at home now, from YouTube to game night to library books (a fav of mine!) Here’s a few more ideas.
I can’t leave this suggestion without talking about the library. If you haven’t been to the library for years, it’s time that you go. Perhaps you have memories of a library with musty books and 150 year old librarians. Let me tell you, today the library is the “go to” place for books, movies, ebooks, video games, etc…and what they don’t have can be ordered through “interlibrary” from anywhere in the country! Find a couple locations of library and check them out. (pun intended)
7. Quit those bad habits – Smoking, drinking, recreational drugs, . These habits are bad for your mind, your body and for your billfold. Enough said. Make some changes.
8. Shop only with a purpose and a list – Shop only when there is a need. You can’t go into a mall or a store and stroll around and expect to not buy anything. No malls, folks. You only go shopping when you need something, better yet, only when you need a few things. Don’t waste the gas to go get one thing. Keep a list on the frig for other family members to write down what they need or see that is running low. In our home, we have a grocery day and I go only on that day. The kids know to add what they need to my “Notes” on my iPhone, and that gives me time to look for sales and/or coupons.
9. Never take money out of an ATM again – This is just poor planning. Refer to #3.
10. Get rid of cable – Cable is so passe. Multitudes of alternatives make it virtually obsolete now, here’s a list of options. Keep your money and pay down debt.
11. Have a garage sale – Actually, enlist Craigslist and Facebook marketplace as well. My husband and I sold everything that wasn’t critical to our existence, because we were anxious to pay off old debt. We sold couches, furniture, children’s clothes, cars, etc. Prioritize by selling anything you still owe money on that you just don’t need, and pay off that balance. Keep minimizing your home by selling off things you don’t need using the appropriate platform. Don’t bring anything into your home without eliminating something. Keeping your home simple and clean will keep your stress down and your mind focused.
12. Shop for food at discount grocers – There is so much competition out there in the grocery world, and the margins are very lean for most stores. However, it’s almost impossible for any one store to have the lowest price on everything. The best way to minimize your grocery spending is to do a price book, but at least look for places like Aldi and Save-a-Lot to do the bulk of your shopping. I love Aldi for staples!
13. Learn to cook simple meals from scratch – So, if you’re going to be eating at home, you need to be able to make simple meals. A little planning on weekends will go a long way to keeping you out of the drive-thru. We always keep boiled eggs, lean turkey, baby carrots and yogurt in the frig for quick and nutritious lunches and snacks. My older boys who live on their own prepare chicken breast, rice and broccoli on the weekends and keep themselves fed for dinner most of the week. Keep it simple and doable. Here’s another source to take a look at.
14. Stop buying gifts for people (anyone but your immediate family/children) – Depending upon how you were raised and what the level of expectation is, this could be the most difficult thing you deal with. There were so many expectations in my extended family in terms of gift-giving, it was really unhealthy. Next to groceries, gifts is usually one of the categories that is the most out of control.
I encourage you to take the time and talk with your spouse about this, and have those conversations with grandma and your parents. They may not agree, but again, this is your life. No one could fault you for taking care of your financial house (on second thought, it might not go well at all! Mine didn’t!) but that’s ok. They don’t pay your bills. You’re allowed to make your own decisions.
When we told our extended family that we were trying to get out of debt and live more fiscally responsible, and that we would be giving handmade gifts for Christmas, it went over like a lead balloon. Seriously. I made food baskets for each extended family member with homemade bread, marinara sauce and pasta in a cute garage-saled basket. They weren’t impressed.
The following year, we stopped buying for the parents all together. To this day, I think they still resent it.
Oh, and those office gift expectations? Yep, get rid of those. White Elephant parties? Gone. Pitching in for the baseball coach? Not if you can’t pay your bills.
Take control and don’t let people tell you what you have to buy!
15. Take care of what you have – This goes a long way! Taking care of your clothes, shoes, furniture, furnace, tools, appliances, etc. extends the life of those things, meaning that you won’t have to buy another one anytime soon!
I change the furnace filter every month on the first. On that day, I also flush a packet on enzymes down the toilet for the septic system. I give the dogs their flea pills on the first as well. These are just regular maintenance chores that keep things working well and minimize problems.
I buy mostly better brands of used clothing, which I take very good care of. I line dry most of my clothes to make them last longer, and save on electricity too. Washing in the gentle cycle is also instrumental in making clothes last longer.
Put tools away so you can find them, clean out your frig once a week and make sure all of your food is being rotated and eaten. All of these habits save money!
16. Take care of your health and be your own advocate – Regular check ups and maintenance will go a long way to keep you healthy and out of crises situations, which always cost more money to solve. If you insurance covers dental cleanings, make sure you get there for them! Anything preventative that your insurance covers, for goodness sakes, take advantage of it!
If you have a tooth that’s achy, don’t wait until you’re in so much pain that you’ll agree to anything. Regular flossing and brushing go a long way to prevent dental issues.
Eat well and take care of yourself! If you need to lose weight, do it! No one is going to do it for you. You can’t eat junk food and expect to feel good or stay healthy very long. Sickness and disease is expensive.
17. DIY your own personal care/ cleaning products – It is so incredibly easy to make your own laundry detergent, deodorant and cleaners. A few simple ingredients and you’re off to the races saving tons of money every single month.
18. Re-evaluate every single monthly bill you have – Go line by line and scrutinize every single expense and ask yourself if you could live without it. We canceled every magazine subscription and the newspaper. Studies show that magazine readers tend to buy more. The news is online to read every minute of the day, no need to buy a print paper.
Do you have a rotating charge that you’ve forgotten about, perhaps a weight loss app that you’re paying for every month? Go back and look for those little things that are taking your money!
19. Don’t buy anything without mutual agreement with your spouse (24 hour rule) – This is a great rule when you already know you’re weak in certain areas. Frankly, there were stores that I just needed to stay out of, and places I didn’t need to go and be tempted to spend. Committing the to “24 Hour Rule” helped me to save a lot of money just by waiting.
If you’re out and see something that’s a great deal or something you really want, you must wait a full 24 hours before buying. Usually, like 9 times out of 10, I never went back. Very powerful tool.
20. Plan a garden – Growing some of your own food in the summer is so empowering and wonderful! If you haven’t ever had a garden, start small and read “The Square Foot Garden”, available at the library. If you live in the city, check out books and websites about “container gardening”. No excuses, everyone can grow something.
21. Consider a side hustle– Consider that second job or “side hustle”, even if it’s a temporary thing. My older kids all work regular jobs and have side hustles as well. One is into computer stuff, another delivers pizzas, but it gives them extra cash to pay for school and meet their goals. I love sidehustlenation.com! Nick Loper has zillions of side hustle ideas!
22. Learn to barter – Bartering is the oldest form of currency, and is making a big comeback among millennials. If you can offer any kind of service or product, you can barter. I’ve learned to barter in recent years, my best “swap” yet was for 10 laying hens that I wanted, I traded honey and coffee soap I made. But if you can repair electric, maybe you could barter for legal help. I’ve read about physicians who are so strapped for cash that they are openly bartering for goods and services. Don’t be afraid to ask, all they can do is say no.
23. Consider raising your own meat – If you have some land or if you live in the suburbs, chances are you could raise some meat birds. Many cities are re-evaluating ordinances and allowing 4 hens to a lot. Perhaps you have a family member with some land that you could use! There are folks with acres and acres of land that they aren’t using in a productive way, ask around.
I’ve read about folks in apartments who raise tilapia in fish tanks in their living rooms! I’ve also read about apartment dwellers raising rabbits for meat, and selling to restaurants as well! The possibilities are endless, again, think outside the box!
24. Make sure able-bodied kids are earning their way – The greatest threat to your retirement dollars are adult children. Yep, those precious children need to earn their own way in a reasonable amount of time. This is obviously an incremental process, but make sure your kids understand the value of hard work early in life, and don’t get suckered into paying for every little thing as they become teenagers. If they want to drive, they need to help save for a car. They also need to work and pay for the gas and insurance.
I don’t believe in making things so hard for our young adults that they just throw their hands up in defeat, what we’re working towards here is a “work ethic”. Earning their own money builds confidence and makes them productive adults. Help them along when you can, but point the way to independence.
25. Take action – If you’re reading this, and obviously you are, it’s time for change. Only you can do this. You gain nothing from this life unless you work and get down to business.
Begin with #1 of this post and work until you’ve got a budget going. If might take a while, but stick with it. Make the change!