Being great with money isn’t just something that any single person can be born with, it is something that has to be worked on every single day. A person who is great with money makes decisions each and every day that will bring them closer to their goals.
Most people in their 20s and even their 30s aren’t really great with money, because we’re constantly in an I’ll deal with it later kind of mindset that makes us spend way more than we’d like to, and hardly save any money.
I’m really glad that you stumbled upon this article, because it’s filled with seventeen habits of people who are great with money that you can start implementing into your life now so you can be amazing with money in the next few years.
17 Habits of People Who Are GREAT With Money
1. They Have a Budget
I’m not saying that every single person who is good with money has a strict written budget, however, they pretty much all have at least a loose budget and an understand of where their money is going each month.
Budgeting gives your money a job and makes it work for you, instead of you just working for your money. It’s going to help you stay organized and really make smart financial decisions.
Budgeting even helps you have a better and stronger relationship with your significant other, because you can have budget meetings and get on the same page about your money decisions instead of not understanding where your money is going.
If you truly want to be great with money, it’s important that you really try to work towards having a budget so you can control where your money is going instead of waiting till the end of the month to think about savings.
- Recommended Reading: Budgeting for Beginners ~ a 7 Step Guide!
2. They Know How Much Money is Coming In
I get a lot of emails from my readers, people like you, who are struggling with money. A lot of the time I’ll start asking questions that will make me more aware of the situation so I can talk them through some smart steps to take.
The first question I always ask is, how much money do you make each month, household income, after taxes? And 99.9% of the time, the person who is emailing me doesn’t know the answer to the question, or has to go look it up.
How are you supposed to know where to put your money in a budget, or how much money you’re able to save, if you aren’t even aware of how much money you bring home?
People who are great with money will always have an exact number in their head of how much they are going to bring in during a given month, and they already have a rough idea of where it’s going to go.
3. They Set Financial Goals
If you really want to be great with money, the first thing you should do is set some financial goals that are going to motivate you to keep working on your finances. You can create goals on things like paying for college (or your children’s college), putting a downpayment on a home, retiring early, and so much more.
Having these goals is going to keep you focused on saving money and investing more money so you aren’t making as many impulse purchases and trying to keep up with your friends and neighbours.
- Recommended Reading: How to Create a 5 Year Financial Plan
4. They Have an Abundance Mindset
There are two ways to think about money and wealth that can serious affect how you are with money and how much money you let come to you. The first, is a scarcity mindset. This means that you spend a lot of time thinking about how there isn’t enough money to go around and how you are never going to have enough money.
The second, is an abundance mindset. This means that you are thinking about how money flows freely and it’s just energy that will come back to you. This may sound silly to some, but when you’re constantly thinking about how you are never going to have enough money, you’re going to confirm that belief and never change your life.
If you’re really struggling with your money mindset, you should check out Money Mindset for Her by Natalie Bacon. It can seriously change your life.
5. They Never Make Impulse Purchases
Someone who is great with money is only going to buy things that they actually need. They aren’t tempted by the lines at the grocery store and all the little goodies that they try to get you to buy. They also never buy things just because they are on sale! When you make tons of impulse purchases, they really add up. Even if it’s just a few dollars!
- Recommended Reading: How to Quit Overspending
6. They Understand Frugality
Most people think that being frugal just means that you’re cheap and you never spend money. This is entirely not true. People who are great with money really understand that frugality means you make smart decisions about how you will spend your money that are important to you, instead of just buying things because you want them.
Someone who is frugal will focus most on their financial priorities and their future and will skip buying things so they can get closer to where they want to be. Frugality is an essential step of being really great with money.
- Recommended Reading: 32 Things Frugal People Never Do
7. They Don’t Have Debt
Debt is one of those things that really hurts us in the long run, and makes it so we can’t grow our wealth because we’re constantly paying minimum payments. People who are great with money are insanely aware of this fact, and will try their best to pay off their debt quickly and completely so they can grow their wealth.
When you have debt, you can’t do things like make smart investment decisions, or put a downpayment on a house because you just don’t have the money.
8. They Think About Risk
When thinking about their money, people who are great with money often think about risk. They aren’t going to put all of their life savings into a single investment because there is always the risk that they may lose it all.
This means that their investments are diversified and they are ready for any change in the market because they aren’t relying on a single asset. They also take in some higher risk investments because they understand that that money may be gone, but it may make them a ton of money if it goes well.
It’s important to remember that any money you invest, is money that you may lose, and people who are great with money understand this thoroughly.
9. They Have More Than One Bank Account
A lot of people who make big money mistakes often do so because they only have one bank account. They have their savings, checking, and bill payments all happening in one account and that makes it really hard to track it all.
People who are great with money understand that separating their money is going to make it so much easier to keep their savings and spending money separated in their mind, so they won’t be tempted to spend it.
- Recommended Reading: Bank Accounts Every Family Should Have
10. They Use Credit Intelligently
Someone who is great with money doesn’t use credit cards as a crutch. Most people won’t use credit cards, but the ones that do, use them to gain points and win with money.
These types of people will put all of their monthly bills on a credit card so that they can earn things like air miles, movie tickets, travel rewards, and cash back. They never carry a balance on the card, however, because that would mean they have to throw money away at interest payments.
Someone who is great with money has an emergency fund, so they aren’t tempted to use a credit card to cover anything unless they are able to pay it off in full, immediately!
- Recommended Reading: 11 Credit Card Rules You Should Be Following
11. They Know How To Prioritize
People who are great with money have spent their time learning what’s most important to them, and what financial decisions are going to set them up the greatest. If they are paying off debt, they prioritize the highest interest debt first.
If they are making a budget, they prioritize the four walls first (food, utilities, shelter, transportation). They have a deeper understanding of what is going to make them get the best return and keep them safest financially!
12. They Have Emergency Money Ready
People who are amazing with their money know that there are no guarantees in life. Bad things are always going to pop up and happen out of no where, which means that you’ll need the money to cover these bad things.
You never know when you’ll lose your job, or crash your car, or have a giant tree fall on your house and not have a big enough insurance plan to cover it. Emergencies are always happening around us, and we need to be prepared.
If you don’t yet have an emergency fund, you should start building one. This can start off as something as small as a $1000 emergency fund, and eventually build up to be 3-6 months of expenses.
- Recommended Reading: How to Build an Emergency Fund ~ The Right WAY!
13. They Stay Organized
This one may seem like it’s entirely unrelated to people who are great with money, but people who are organized are much less likely to throw their money away on things that they already own!
When you have a messy home and too much stuff, you’re going to have a ton of clutter and disorganization. Your kid will need their very specific pair of soccer shoes one day, and when they can’t find them, you’ll go out in a panic right before their game and buy a brand new pair, only to find them an hour after you get home.
Being unorganized will waste you a whole bunch of money, so if you want to be great with money it’s important to start at home and get organized! I highly suggest the book, The Life Changing Magic of Tidying Up!
14. They Plan Ahead For Their Taxes
When most people get a tax return back from the government, they are tempted to spend it on things they don’t actually need. This is even worse if they haven’t planned ahead and thought about positive things that money could do.
People who are great with money are much more likely to have an exact plan for where they’ll put the tax return they are receiving and they make that money work for them, instead of just buying things they are never going to use.
If you own your business this takes on a whole different meaning. People who are great with money and are self-employed need to be thinking about their taxes essentially all year long and putting money aside in order to pay those taxes.
If you aren’t planning ahead and saving the money as the year goes on, you’ll have a really harsh wake up call come tax time.
15. They Never Stop Learning
Learning about money is one of the best things you can do for your financial future and wealth building. If you don’t understand personal finance, you’ll never be able to get further along with your money.
Here are a few of my absolute favourite personal finance books that you should grab a copy of, they have been integral in my personal finance education:
Speaking of learning about money, you can continue your knowledge by subscribe to my email list and making sure you get weekly updates and finance tips! You can sign up using the form below.
16. They Call For Better Rates
Someone who is great with money never wants to give a giant corporation more money than is absolutely necessary. They will take a new minutes to call any companies with which they have a bill due and see what they can do to get a lower rate.
Doing this small task will save them anywhere from a few dollars to a few hundred dollars a month if they do it often enough! Companies are always focused on customer retention so they don’t want you to leave their company for another, and will often give lower rates to get you to stay.
17. They Always Try To Fix It
A huge aspect of being really great with money is knowing when you can fix something, and when it’s time to just say goodbye. People who are great with money will never go straight to the throwing away option because they know that they can get that thing to last them years if they just do a little bit of maintenance now!
It’s even easier to fix things and do DIY fixes these days because you can find a youtube video or a blog post on how to fix almost anything and order all of your supplies online!
Nobody is born being amazing with money, we all need to work on building great financial habits and being smarter with our money. It takes a few small steps and little changes each and every day, I promise it’s a lot easier than it seems.
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