5 Financial Habits You Need to Win

The habits that you put into place in your twenties will follow you throughout your life, and help you take the financial steps you need to while in your twenties. This is the best time to establish the habits that will make it possible for you to become wealthy. There are a few things you can begin doing now that will benefit you as you grow older and get ready to retire. The people who are truly successful at building wealth follow these basic habits and avoid making financial mistakes. They avoid common money misconceptions and work hard to make the most of the money they do have. You can break your bad habits, but its better if you start by establishing good ones. These steps can help you break out of your financial rut and set successful financial goals.

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Financial Habit 1: Budget

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The most important thing you can do each month is to create a new written budget for the money that you have to spend. While this is important when you are single, it is doubly so when you are married. If you can work together in this, you will be able to reach the financial goals that you have set for yourself. Budgeting is empowering, because it gives you more control on where your money goes. You can make conscious decisions on what is most important to you, and then make your spending match those decisions. The budget you create will make it possible for you to get control of your money.

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Financial Habit 2: Save Money

The next habit you need to develop is the ability to save money. You should set a goal with the amount that you want to set aside to put into savings each month. The best way to set this goal is as a percentage of your income. You can use the savings to put towards a down payment on your first home, for your emergency fund or to cover vacations. The habits of spending less than you make is one of the best ones that you can establish, because it gives you the opportunity to really begin to build wealth.

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Financial Habit 3: Max Out Your Retirement Savings Options

When you start contributing to retirement regularly in your twenties, you will not need to worry very much about your retirement savings. If you are consistently putting in fifteen percent of your income to retirement accounts each year, you will be able to retire comfortably. When you are in your twenties, you can balance your portfolio more aggressively, but as you get closer to your fifties, you will need to a more conservative investment portfolio.

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Financial Habit 4: Don't Borrow Money

With the exception of your home, you should do everything you can to avoid borrowing money. Once you start using a credit card it can be hard to stop and before you know it you have a lot of debt. You can save up and purchase your cars with cash, which will give you more negotiating power in working out a deal on the car. It takes extra planning and saving to stop borrowing money, but it is worth it. You can take the steps now to avoid borrowing the money in the future. Take the time now to make the changes you need in your financial life, so that you can stop borrowing money. Your emergency fund can help you stop relying on credit cards.

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Financial Habit 5: Create a Financial Plan

Your financial plan should consist of the goals that you are working toward. These things should include home ownership, starting a family, saving for college, and career goals. This plan will keep you on track. It helps to have a solid goal that you are working toward. Your financial plan will keep you moving forward so that you do not stall out in one stage and fail to reach the goals that you want to financially. It can be frustrating to never buy a house because you did not follow through with a plan for home ownership. Taking the time to create a long-term financial plan will help you come to the point where you are reaching the goals that you have set for yourself. Every year take the time to review your plan and adjust your goals so that you continue to move forward.