7 Good budget habits that will improve your financial life

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We are all creatures of habits, and the habits we build over time affect pretty much of everything we do: work, marriage, managing our personal finance and a host of others. To that end, polishing up our habits every now and then, particularly in the area of personal finance, will not only help us achieve our financial goals but also help us live better, generally.

Now, as you may know, one of the secrets to financial independence is mastering the art of budgeting. To master this art, you must first master the habits that come with it. Let’s have a look at 7 money habits which when mastered will make you a better budgeter.

Habit #1: Setting a goal

A popular saying goes thus:

You can’t shoot at what you can’t aim

The truth couldn’t be any farther. Until you determine what you want to achieve by budgeting your finances, you will have a hard time getting started, let alone sticking around.

Put simply, you need to set a goal. While there are no hard and fast rules when it comes to setting financial goals, a good goal should at least touch any of these areas:

  • Amount of money to be saved every week/month
  • Maximum/weekly expenditure
  • Debt to be paid off at a given period
  • Build up an emergency fund

Setting goals makes it easy to keep pushing when the chips are down, and voices in your head start whispering “quit now”.

Habit #2: Keeping track of expenditure

Have you ever wondered why some people with a very large monthly paycheck still sink into debt? It’s a no-brainer; they spend more than they earn – period.

Budget savvy people and money managers are in the habit of stubbornly keeping track of where their money go to. When you get into the habit of tracking your expenditure, it becomes easier to jump over the pitfall of spending more than you earn, hence staying afloat when everyone else is sinking into debt.

There are two ways you can go about tracking your daily expenditure:

  • Writing down on a notepad all that you spend your money on, at the end of every day. To make things easy, always request for a voucher for everything you buy.
  • Leverage expenditure tracking tools – there is a boatload of them out there: Quicken, Personal Capital, and, of course, the good ol’ spreadsheet.

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Habit #3: Being accountable

There are always lots of shiny and beautiful stuff to buy, and boy! – the temptation to buy them is sometimes overwhelming. Little wonder why many people still blow it no matter how militant they try to be with their budget.

The easiest way to overcome this challenge is becoming accountable to someone you trust real good. You can see such an individual as a financial coach who will help keep you going when quitting seems like the best thing to do.

Do bear in mind, however, that working with an accountability partner, especially when trying to get out of debt, can be discomfiting. The reason for this is that you might have to do things you simply do not want to do all the time.

You don’t have to hire a financial coach for this. A friend, spouse, relative or even son/daughter can help.

Habit #4: Resisting impulsive buying

Wanna develop a good spending habit? Leverage the power of delayed gratification.

Delayed gratification, at its simplest, is waiting a little longer when the idea to do something, in this case, buy something, suddenly pops up.

Of course, waiting a little more when tempted to spend money on something is no mean feat, but there are several ways to make things easy:

  • Using less of credit cards and more of cash
  • Preparing a list when going shopping
  • Carrying less money around
  • Setting a weekly/monthly budget

Either way, it still boils down to discipline – if you aren’t disciplined enough, none of these tactics will work for you.

Habit #5: Looking for ways to cut down on expenditure

Believe it or not, there are like 1001 things you can do right down to cut down on expenditure. All you need do is to look a little bit deeper to find them.

What if you commute to work via public mass transit instead of driving?

How about turning off light bulbs when not in use to reduce utility bills?

What would happen if you bought second-hand items instead of brand new?

All these and many more are the things you can do to save some extra money and improve your financial lot.

Also, you can critically examine your budget categories to fish out items on it that can’t be really called a need. As you may know, our needs are different from our wants, and when it comes to living frugally, needs are the way to go.

Habit #6: Celebrating small wins

It is easy to get fixated on things we do wrong while turning blind eyes to the ones we do right. If you chose to go this route, misery and frustration are what you will meet at the end of the road.

Rewarding yourself for accomplishing small milestones does not in any way mean you are compromising your standards. On the contrary, it is a subtle way of reassuring yourself that you can still accomplish your goals no matter the number of times you stumble.

If you were able to save $25 in a week, rewarding yourself with $5 won’t hurt in any way. But if the idea of spending on yourself doesn’t go down well, give yourself a treat. A treat can take the form of visiting an amusement park (free ones), indulging in a hobby – just engage in whatever catches your fancy.

Habit #7: Measure and analyze

In the words of Sir Winston Churchill:

“However beautiful the strategy, you should occasionally look at the results”

It is needful that you check to see if your approach to budgeting is working, every now and then. If it isn’t working, make necessary changes or discard it all together.


The secret to living a debt-free life and having extra money is building and maintaining healthy financial habits. The more of them you have, the better your financial life would be.

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