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Glenn's 5 Money Habits

As a father, I do my best to teach my kids good habits. Brush your teeth. Eat your vegetables. Say your prayers. Tell people please and thank you. I also try to model those habits through my own actions. One of the most important habits that I model for my children is my money habit. We all have money habits, whether they are good or bad, because we all make decisions every day regarding money. And, the sooner you turn your money decisions into good habits, the better. I've never had a client tell me, "Glenn, you made me save too much money." I also don't think anyone will wish they had bad money habits after developing good ones. Let me share with you five of my most important money habits.

  1. Make saving habits easy by setting up automatic transfer.
    Life is busy for me as a father of two. Even as an investment advisor, I find that if I leave saving up to my memory, it can get forgotten. It can also take a back seat to spending on other items if not taken out of my paycheck first. Setting up automatic investing has been a powerful tool in my financial wheelhouse. By automatically deducting my savings and investments, it is as if the money is not even there and I don't have to make the decision to save it or spend it.
  2. Do not increase your spending when you get a raise.
    Getting a raise is certainly something to celebrate, but it should not change your spending habits. If you are living within your means, getting a raise is an easy way to increase your savings with each paycheck. Again, remember Habit #1, and make sure you automatically transfer those extra earnings into your savings or investment accounts with each paycheck so it's like they aren't even there.
  3. Always save for a rainy day.
    Emergency funds are critical because life just happens. My wife and I had to buy a new car a few months ago when our old one stopped working. If I had not had an emergency fund, I would have had to dip into my savings or retirement investment accounts to pay for it. If you have to do that, you are shortchanging your future. Generally, your emergency fund should equal 3-6 months' worth of living expenses. Once you have that saved, you should use it just for that – emergencies only! And, if you do use it, your first priority should be to build it back up. Then you can save for retirement and your investments will be protected by the cushion your emergency fund provides when life happens.
  4. Use cash.
    People like to use credit cards because they are convenient and they may even earn rewards such as airline or hotel points. But, did you know that people spend more when using a credit card vs. cash? Studies have shown that when given the choice to pay with a credit card or cash, people spend up to 83% more when using credit cards instead of cash.* One reason for this is that cash is a tangible thing and you may have a limited amount in your wallet compared to a much higher credit limit on your card. The research is fascinating and if you are interested, I would encourage you to check out the links below. But, the point is that if you can make it a habit to use just cash for your everyday purchases, you could be saving money in the long run.
  5. Be generous.
    Winston Churchill once said, "We make a living by what we get, but we make a life by what we give." I don't believe the purpose of saving and investing is to be greedy. Money is a tool that can be used to do wonderful things and help those in need. Find a cause or a charity that is important to your values and help support it financially. Try to donate a certain percentage of your income on a regular basis. Make generosity a habit. I think if you do that, you will earn lifelong returns that will fulfill you in numerous ways.

Simply put, your money habits can impact your life tremendously, whether for good or bad. How do your money habits affect your life? If you would like some help in developing good money habits, I am here to help you with more tips and advice. If you have any questions about investing or are wondering how you can get started, I would be happy to meet with you for a no-cost consultation. You can e-mail me at gleest@wtwealthmanagement.com or call (928) 225-2474.

Sincerely,
Glenn Leest

Gleen Leest

References:
NerdWallet: Credit Cards Make you Spend More
*ValuePenguin: Credit Card Spending Studies (2018 Report): Why You Spend More with a Credit Card


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