Success is boring. It’s almost never the result of a brilliant flash of inspiration or a momentary stroke of luck.
Instead, success is about slowly building on tiny victories over a sustained period of time, grinding away and improving gradually. Usually, that starts with good habits.
Habits build confidence. Confidence encourages more action, and that leads to a positive feedback loop where the end result is a notable improvement.
If you’re looking to improve your financial situation in 2019, here are five habits you can use to lay the groundwork.
The easiest way to start saving money is to take willpower out of the equation, and the best way to do that is to set up an automatic system.
Going with hands-off saving means you don’t have to make a conscious decision about whether or not you want to save $200 or buy a new TV.
There are a few different ways you can start saving automatically. The first is to change your direct deposit at work to transfer some of your paycheck directly into a separate savings account. This way, the money won’t even hit your checking account.
If you don’t want to change your direct deposit, you can also create transfers from your checking account into a savings account. Keep your checking account at a separate bank if you’re worried about self-control.
Apps like Digit are also good for people who want to save. Digit removes money from your checking account and stores it in a separate account. The amount withdrawn varies based on how much you have in your current checking account. The more you have, the more Digit will withdraw.
It’s no secret – the best financial habit you can pick up is smart, consistent budgeting.
Having a budget means setting reasonable expectations, tracking your expenses and examining where you went right or wrong.
Creating a budget is difficult because it involves reconciling your idealized financial life with your reality.
Someone who spends $200 on fast food every month might not want to face the facts, but seeing how you spend money makes you aware of how every dollar truly matters in the long run.
If you’re scared to take a closer look at your spending, that’s probably a good sign that you need to start.
Choose a Debt Payoff Plan
Make 2019 the year that you finally tackle any outstanding debt.
I’m not saying you have to pay it off in 12 months – especially if you have a mortgage or a significant student loan balance – but you can still make a plan and create some realistic goals.
List all the debt you have and write down all relevant information, including the lender, the interest rate, the monthly payment, and the total balance.
Next, decide how you want to pay it off. There are two schools of thought on debt payoff, the snowball and the avalanche method. With the avalanche method, you pay off any high-interest first because you’ll save more on interest.
The debt snowball method, popularized by Dave Ramsey, says you should pay off your debt in order from smallest balance to largest. You’ll knock out individual loans faster this way, which will instill more confidence in your finances.
Research shows that the debt snowball method is better because people become emotionally invested in getting rid of their debt sooner.
Use the snowball method if you struggle with staying motivated to pay down debt, and use the avalanche method if you simply want to save the most money.
Create Shopping and Spending Rules
If high spending has gotten you in trouble before, consider making some hard-and-fast rules to curb that behavior.
Wait 24 hours before making a purchase, even longer if it’s a large purchase. The longer you hold off, the less likely it is you’ll buy something on an impulse.
When I see an item I like and don’t need, I add it to my wishlist and come back later.
There are countless ways to check your credit score for free.
For instance, your bank or credit card provider probably lets you monitor your credit without paying an extra fee or signing up separately.
If you check your credit regularly, you’ll notice if your account gets hacked or if you have a late payment reported. For people trying to qualify for a mortgage or other kind of loan, tracking your credit score is essential to qualifying.