5 Financial Habits That Will Change Your Life

If you prefer watching a video instead of reading a long wall of text, check out the YouTube video instead.

The Beginning of Everything

When I first started out, life was hard. I had to trawl through many websites, articles, blogs, videos etc. to find the common foundational financial habits of the rich. After countless years of research probably reading the same points a million times over, here are 5 financial habits that have I've adopted that have changed my life & will definitely change yours for the better.

Habit #1: Track your Money

The first & most foundational habit is tracking your money. Just like how a business requires an accountant to keep track of revenue, profits, losses etc., you need to be the accountant of your own life. Realise the sobering truth of how much you're spending & knowing where your money is going.

I was once spending over $200 a month just on taking cabs as a student. After applying this habit, I became more disciplined with my time & took more public transport, leaving cabs as the last resort.

Apps such as YNAB, Seedly, Spendee & Toshl are common examples of expense tracking apps. In addition, I've created some Google Spreadsheets over the years which can be used to supplement the expense trackers. Feel free to personalise & use these spreadsheets. Let me know in the comments if you found it helpful or if you find any bugs.

Budget Spreadsheets:

• Singles Edition

• Couples Edition

If you forget everything, just remember this 1st point as I guarantee you that an activity as simple as this will have the biggest impact on the rest of your life.

Habit #2: Only Buy the Essentials

This is about getting into the mindset of being frugal. There is a line that separates needs from wants & this would differ from person to person. Challenge yourself to to reduce expenditure on things that don't make you significantly happier. In this, you're slowly moving items under the "needs" section across the line into the "wants".

Also, consider what AFFORDABILITY means. It is more than simply saying that I have $5 and I can afford a $3 cup of bubble tea. That's a myopic view which I personally fall into all the time. Think about the following

• Do you have long-term financial goals & are you putting those at risk if you were to purchase something?

• Have you prioritised investing & savings or are you being inconsistent with your income allocation?

Small things can add up & potentially spiral out of control. But if you carefully & consistently stick to your budget that is in line with your goals, you can let up on the overthinking on every purchase.

Some things yoo can get started on are to

• Cancel unused monthly subscriptions

• Apply a 1-week cart rule (if it didn't cross your mind after a week, you don't really need it

On the flip side, make use of discount codes/coupons/cashback to "soften the blow". It only takes a few minutes to potentially make an extra 10 to 20% savings.

Use ShopBack to get cashback for purchases. Because you're already going to make a purchase, why not get more benefits for the price of FREE. BUT, do NOT use this as an excuse to spend more by going out of your way for that purchase.

Habit #3: Make your Money Invisible

Stick to a budget by removing all temptation to spend more than you should. As soon as payday arrives, setup an automatic transfer to a joint bank account (for savings) & brokerages (for investments). Even better if you can find an accountabililty buddy for this!

E.g. If I have a $3000 salary, I automatically transfer 20% (which is $600) for savings, the same 20% for investments.

The moment this amount is out of sight & out of mind, you reward yourself by actually having those tangible savings & investments. You'll also naturally adjust to live off less. Once you see this working for you, you won't break this habit. I'm getting that warm fuzzy feeling just thinking about it.

Habit #4: Don't Buy Things to Show Off

When I was my younger insecure self, I thought that by openly displaying my wealth, I could be respected & gain acceptance from people around me. As I grew older, I realised that...

Human life in itself is sacred & precious. That is the innate value you were born with that no item or possession can change. If you currently buy things to impress others, I understand how you feel but don't continue making the same mistakes that I did. Know that what you have or don't have doesn't define who you are. Don't reduce your self-worth to the mere things that you own.

In your money decisions, make sure that it is done genuinely for the benefit of you, your family & others instead of being borne out of insecurities or selfish ambition.

Habit #5 Take Calculated Risks

This is related to investments. Everyone has different risk appetites. If you're super conservative, don't hurt your long-term financial goals by not investing at all (like hiding all your money in a milo tin under your bed). Conversely, if you love risk, don't put your money into something that you don't fully understand & lose it all (FOMO & pump all your money without any considerations).

Find that sweet spot of CALCULATED RISK.

• Risk - Invest!!!

• Calculated - Do your due diligence in understanding what you're putting your money into

Yes..even crossing the road is a calculated risk....think about it.

At some point, you have to step out of your comfort zone in a measure & progressive manner. Apply this habit so that you don't miss out life's greatest opportunities while minimising the potential risks that come along with it.