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Healthy Financial Habits

As we crest the wave into February, it would be safe to assume that some of January’s good intentions may have been washed away in the relentless flow of days and weeks that seem to pass ever more quickly. It can be tempting, if we haven’t made any significant progress with our goals, to just let them go for another year under the belief that frankly, life can be hard enough already.

The best course of action here, is to be kind to yourself. All the most worthwhile things in life are achieved through consistent, small actions – actions that can be turned into habits and gradually give form to our, as yet, unachieved goals. Practice a little every day, and mountains can be moved; so why should personal finance be any different and what are the best habits to adopt?

Learn how to budget

There’s a great deal of power and security in knowing exactly how much is coming in and going out of your personal account on a monthly basis. It’s so much easier to stick to a budget when you know have a tight grasp on your outgoings. This doesn’t have to be a complicated affair; no need for spreadsheets or hundreds of graphs. Simply knowing how much you are spending on the basics like food, accommodation, transport and utilities will give you a good idea of how much you have leftover to play with when the essentials are covered. And that’s going to allow you to allocate funds to those areas that might otherwise get neglected.

Savings

One of the most powerful habits you can get into, saving monthly from as early on in your career as possible is the best way to build up your nest egg for the future. Once you have budgeted for all other outgoings, a direct debit into a savings account is a great way to ensure you’re not tempted to spend what might otherwise be put away for the future.

Check-in with your financial advisor

If you are already working with a professional advisor, then it’s worth scheduling a regular appointment to see how things are going and to update them with any changes in your circumstances. It may be that you have a little extra that you can allocate to your investment strategy, or you’re just curious how your investments are performing and if there is anything you should be doing to maximise your returns. Working with an IFA is a relationship, and one that can last for years; the better they know you and what your goals are, the better they will serve you in the long run.

If you aren’t already working with an advisor, now is the time to set up a meeting to start building your financial strategy and habits for the future.

Emergency fund

Putting aside some money for a rainy day is something we should all be doing. A good rule of thumb is to have enough put by to tide you over for 2 or 3 months should anything unexpected happen. This means having a fund you can access at pretty short notice, not something that’s tied up in a limited access savings account, or involves selling assets.

It may only be an unexpected garage bill, but that could blow a large hole in your outgoings for the month. The trick is to replenish the fund once you’ve used it however, think of it as a financial buffer between you and the unknown.

Check your bank statements

Many of us now only receive bank statements electronically, and unless you log in to your online bank regularly, you may even miss these – and do we check them? Something about those old paper statements made it much more likely that we would spend a couple of minutes scanning the columns for anything untoward. It may only be that old gym membership, or streaming service that you thought you had cancelled – subscriptions have a habit of auto-renewing these days, so it’s well worth a regular monthly check.

We start the year with good intentions, but if your financial plans are not going in the direction you had intended, don’t dismiss them out of hand. Get into the habit of making finances something that you look at and readjust on a regular basis, and use the power of small habits to achieve those long-term goals.

 

Blacktower Financial Management has been providing expert, localised, wealth management advice in Portugal for the last 20 years. We can help with specialist, independent advice on securing your financial future. Get in touch with us on +351 289 355 685 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

 

 

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