In 2019, one of my new year resolutions was to get in shape and lose some fats. I hardly exercised at all in 2018 and felt really guilty about it. My goal was a simple 15 minutes work-out everyday but even that seems like a herculean task to me.
I wasn’t motivated and my guilt was making me feel rather worthless. Feeling stuck, I decided to try a new approach. By engaging in an exercise so simple that there was almost no excuse in not attempting it. That was when my one sit-up challenge is born.
Initially I scoffed at my own attempt of trying to be “fit” with my one sit-up routine. How absurd to do a single sit-up and pretend that it can really change my fitness wellbeing. But since I was struggling with my BIG goals, I decided to give this simple idea a shot. Not surprisingly, since I was already in a sit-up position, I decided to do a few more. Then my muscles got warmed up and I did a few push-ups and before I knew it, I was banging out 15 minutes of exercise!
Small habits, some almost insignificant such as the one sit-up exercise, can often demonstrate a large effect over time. Individually they don’t move the needle but these little changes repeated over time can have a significant compounding effect over many years.
When you add them all together, they can help you to achieve things you never thought possible. Here are some simple money habits that I developed that might seem inconspicuous at first, but having a huge impact on my finances and I believe they will help you too.
Simplify your finances
Before I simplified my finances, I had 5-6 bank accounts. It was a hassle tracking all these accounts and I decided to consolidate my bank accounts to just 2: One high interest savings account and one checking account. The purpose of the high-interest savings account is for savings…duh! This will be the account I will be using to save for my retirement fund, kids education fund, emergency fund and holiday funds etc.
You should consider the money in this account dead to you. Never touch it. Each penny in this account has a specific job to do and until that job is completed, the money stays there.
After ensuring that I have “paid” myself sufficiently each month, I will transfer the remaining balance to a separate checking account. This amount is meant for fixed expenses, with the residual balance being my spending money. This is the amount leftover that I can freely spend on any items I want. However, the moment it runs out, the spending stops.
Automate Everything
One reason why we don’t save enough is due to the hassle of having to manually transfer our money into a savings account each month. Just like cutting back on our coffees, we may do it once or twice but if we have to make the manual effort on every single paycheck, we are setting ourselves up to fail. It is human’s nature to be lazy and this is a reason why most budgets tend to fail.
That’s why automated finances work so well. By setting up a bulletproof personal financial system, you can finally get on top of your finances by having a system that passively works for you in the background for years to come.
Your savings and bills will be automated, leaving you to focus on the stuff that really matters to you in life.
Use credit cards in a wise manner
Personal finance experts spend a lot of effort dissuading us from using credit cards and often with good reasons. Many of us abuse them and end up in debt. However, in a world transiting towards cashless payments, avoiding the usage of credit cards is definitely not a long-term solution in solving our money issues. Credit cards when used by the disciplined who can remain cognizant of their ability to pay the monthly bills in full can reap nice benefits.
If you have got no good reasons to avoid credit cards (previous traumatic experiences with credit card debts perhaps?) you should be using them. They have so many perks over cash such as cash back, miles rewards, extended warranties etc.
For myself, I keep my credit card ownership to just one single card so as to simplify my bill payment. While I might miss out on the full benefits of having a suite of credit cards at my disposal, this is my own “wise” manner of using credit cards.
Tracking your Net-worth
I have been tracking my net-worth for a few years and it provides me with a good indication of my overall financial health. It is also an excellent source of motivation when you see that you are on track to meet your long-term net worth goal. Personally, I have already seen a huge impact in terms of motivation to see my own household net-worth increase.
There might be times of volatility, particularly when facing market uncertainties. When you are invested in the stock market, it is not always going to be going up every single month. There will be ups and downs but over the long term, the stock market returns in general have been positive.
By having a good grasp over my household net-worth, I have better control over my financial well-being. While it might not be a pretty picture for starters, at least I am honest on my current financial situation. Again, this number is for YOU. Nobody cares as much about your money as you do!
