Financial Self-Care: The 5 Key Habits
The goal of financial self-care is the reduce financial stress.
Whether we like it or not, in today’s world finances are one of the most primordial aspects of our life. Many people like to pretend money doesn’t make you happy, but the lack of it certainly makes life harsher and more complicated to enjoy. Money comes with a certain peace of mind and freedom that help make life easier. So including a financial plan in your self-care routine is primordial.
Finances often appear a bit tricky, but there are simple and practical habits that you can include in your everyday life that can be tremendous tools to help you manage your money more easily and help reduce financial stress.
So let’s take a look at these five simple habits you can incorporate in your daily life to help you ease your financial worries.
The 5 key steps of financial self-care
1. Reflect on your spending habits
As always, the first step to begin with is reflection. By reflecting and assessing, you get clarity and an overall view of your situation, which will help you make a clear plan to follow to fix what needs fixing or improve what needs improving.
A good way to start this is by asking yourself these questions:
- What are your short-term and long-term financial goals?
- What are your spending habits, and where does your money go each month?
- Are there any outstanding debts or financial challenges you need to address?
Also, keeping all your receipts to analyze what you’re spending a lot of money on is good to help you have a clear visual too, especially when you don’t pay with cash.
2. Create a budget
Now that you have an overall view of your financial situation, and your habits, you can actually start setting up your budget, which is the key step to help you manage your finances. An effective and personal budget is the magic tool to handle your finances with ease. It doesn’t require much time but is a tremendous help when it comes to allocating and using your money wisely and consciously.
So, how do you set up a budget? It’s really easy and can be done just by following these 3 simple and practical steps:
1. List down all your sources of income
This is the starting point. Just write down everything you earn: be sure to include your salary, your freelance income if you have any, or any other sources of money. Then add everything together. This number is your basis. (and you want to keep this in mind while planning, you want to make sure you never exceed this number.)
2. Identify fixed and variable expenses
Now, you want to categorize all your expenses into two categories:
1. Fixed (e.g., rent, utilities, etc…)
2. Variable (e.g., groceries, entertainment, etc…)
When this is done, then you want to estimate how much every category amounts to ( a general number is good enough, it’s just to give you an idea)
Tip:
Always pay for your fix category first. And if there’s anything left, then you can focus on entertainment, etc… But your first priorities should always be your rent, bills, food,
3. Set savings goals
Allocating a portion of your income towards savings is primordial, whether it’s an emergency fund, retirement, or even a specific financial goal you have. Try to add a little to it every month, even if you have to restrain yourself on other stuff to accomplish this.
3. Maintain Your Budget
Setting your budget is good and essential, but then maintaining is the next crucial step, and consistency is key to accomplishing this. This is where the magic happens. And just like setting up your budget, this is actually easy to do. Just follow these 3 steps:
The 3 key steps to maintain your budget:
1. Regularly track your spending
2. Compare it to your budget
3. Make adjustments as needed
Additional tips to help you maintain your budget
- Use budgeting apps
Technology is here to help you so don’t hesitate to leverage it to simplify your tracking process. Using them is super helpful, it just makes everything easier, gives you visual and a basis. On top of that, many apps categorize your spending automatically, and they also provide a real-time overview of your current financial situation.
- Schedule budget reviews
This is important too. Just set aside some time each month to review your budget, assess your progress toward your financial goals, and make any necessary adjustments if you notice some things that don’t work or that you’re struggling with.
4. Create an Emergency Fund
We all know that life has a way of being unpredictable when we least want it, and that unexpected expenses can arise at any moment so making sure you have a safety net to fall upon and rely on is one of the most important things, even if just for your peace of mind. So taking the time and making the effort to build your emergency fund is a crucial aspect of your financial routine and habits.
Simple steps to create and maintain your emergency fund:
- Start small
Aim to save at least three to six months’ worth of living expenses to start with. For this, you can begin by setting aside a small percentage of your income each month, even if you have to save this money on stuff like entertainment, etc…(though this doesn’t mean that you should never indulge or treat yourself – just that it’s always good to have a healthy balance), and think of the peace of mind you’ll earn when you have this money saved and an accident happens.
- Prioritize consistency
This really helped me the most when I started working on my own fund. For this, make contributing to your emergency fund a non-negotiable part of your budget. Even if it’s not much, a little a still better than nothing.
Tip:
You can even make this a fun one. Like introducing a money saving jar and whenever you don’t spend money, you put the money in it, like a coffee you don’t go out for, or a pack of cigarettes, or eating at home instead of going out, etc… These little things will amount to something at the end of the year. (I like to start this in January and count the sum in December. It always feels like a present at the end of the year.)
- Use windfalls wisely
Whenever you receive some unexpected income, such as tax refunds or bonuses or whatever else, allocate it towards your emergency fund to boost its growth.
All these little habits are easy to introduce in your daily life and will help you have a financial safety net and this will help provide you with peace of mind and ensure that you’re prepared for unforeseen circumstances.
5. Mindful Spending
This one is my favorite one. I love it and it has really changed the way I approach spending and money in general. It has helped me become more intentional in my approach, more aware of how I spend my money, and notice if it aligns with my values when I do – which I never used to consider before. I started doing this about ten years ago, and it’s been transformative (and helped me save so much money, which is always a nice bonus).
simple steps to practice mindful spending:
- Identify needs vs. wants
To start with mindful spending, learn to distinguish between your essential expenses and your discretionary spending. And always try to prioritize needs while remaining mindful of your wants.
- Set spending priorities
Now that you have already allocated a portion of your budget to your savings and emergency funds, then you can start allocating for activities or purchases that bring you joy (and align with your values).
- Give yourself a waiting period
This habit is the one that has helped me the most with my spending habits. It really improved everything. Before making non-essential purchases, just maybe give yourself the time to reflect on them. This can help prevent and or reduce impulse buying and ensure that the way you spend your money actually aligns with your priorities and your happiness.
An effective tip that always, always works for me is to give myself some time before I actually purchase anything (at least when it’s not urgent, obviously). I personally like to wait and sit on it for at least 1 or 2 weeks if I can, and see if I’m still interested later on. I see if it still creates a joyful spark and if it doesn’t (and more often than not it doesn’t) then I just move on (and I saved 100% of what I didn’t buy — such a good way to save extra money).
And if I’m in a shop and I can’t actually wait one week or two, then I simply keep the item with me for at least ten or fifteen minutes, and often the desire for it just diminishes and I realize I don’t really need it or want it.
Also, a nice question that I like to ask myself is this one:
Does the pleasure of this exceed its price?
The point is not to never buy anything or never treat yourself, the point is to do it in a way that genuinely makes you happy instead of just trying to impulse buy stuff you don’t actually need or want.
Practicing this also ensured that everything that I have, I actually truly enjoy.
Bottom line
Financial self-care can often appear tricky and difficult, but once you include these easy habits into your life, they can really make a difference in how you manage your finances and help give you peace of mind while saving money without too much struggle or effort. It’s just little things to add to your daily life that will amount to something big later on. Besides, incorporating these five habits into your financial routine will also help you build a secure financial future while also fostering your own sense of control and mindfulness.
One last important thing to remember too:
Taking the time to take care of your finances works like an investment in your overall happiness, peace of mind, and general well-being so that you can live a happier and easier life.
So that’s it for today.
As always, if you have any tips, tricks, ideas, or suggestions to share to help people with their finances, please do not hesitate to share them in the comments below.
I wish you a joyful and agreeable day.