6 overlooked money habits that work wonders for your wealth

In a world of endless financial advice, it’s easy to believe that building financial security requires something complicated, novel or cutting edge.

It doesn’t. Some of the most effective financial habits are the simplest, and often the most overlooked. These are the behaviours that quietly build momentum, helping everyday people create real, lasting financial progress. Here are the six habits — and yes, an espresso machine might be in your future so you can avoid buying $7 lattes.

Habit 1: Know your numbers

According to a survey by the Financial Consumer Agency of Canada, many Canadians don’t actively track their net worth or fully understand their financial position, making it harder to build financial security intentionally. This is a quick fix.

Take inventory of what you own (these are assets) and what you owe (these are liabilities like loans). When you subtract your debts from your assets, you arrive at your net worth.

This is your starting point, and not a judgment. It’s the number that begins to tell your financial story and the goal is to see your net worth grow every month. Even small improvements to your net worth matter, and are an indication that your debts are shrinking and/or assets are growing in value. To do this effectively, you’ll want to establish a budget that prioritizes paying off consumer debt as quickly as possible while putting money toward your future; typically through RRSPs and TFSAs. If there’s more money going out the door than coming in, you’ll need to cut back spending or find a way to make more (or both).

Habit 2: Adopt a winning mindset

Your financial life is shaped as much by your mindset as your math. If you believe you’re “bad with money,” you’re likely to act accordingly. If you believe you can improve or that you deserve the opportunity to learn how to manage money better, you will. 

Financial security isn’t reserved for a select few; it’s built by those who believe they can change their financial trajectory and take consistent action. These folks, even if they don’t earn big bucks, have learned skills to help them keep as much of their money as possible, and they prioritize teaching their children how to do the same. Start by replacing negative self-talk with a growth mindset that centres on “I can do this” and “I am capable of learning this.” Then take action.

Habit 3: Buy better

Higher-quality items last longer, and almost always have a lower cost per use than poor-quality products that break or can’t meet your needs. 

Getting what you need on sale, sometimes in bulk, requires research and price comparison, but saves huge money. It might surprise you to learn that recurring bills, and sometimes interest rates, can also be negotiated. To succeed in getting a lower price or better rate, you’ll want to have done your homework. Be prepared to share a competitive offer and converse politely, but firmly state you require savings — or you’re leaving. Block off between 30 to 60 minutes per vendor you want to negotiate with.

Habit 4: Focus on just one or two goals

What we know about money goals is that it’s tricky to be successful at achieving them if you’ve got more than two or three. Keep them simple and realistic. You’ll measure your progress through your net-worth improvements every month, and hopefully see more money in your budget.

Typical goals would include one focused on saving and investing, and another on paying down debt. Something like saving an extra $100 per week into an emergency fund and putting an additional $300 toward debt each month, once you’ve consolidated balances to a lower rate. I also think it’s healthy to have a fun goal — saving up toward a new bike so you can enjoy getting around the city this summer on the bike paths, for example.

Give your goals time. Momentum builds when you stay consistent.

Habit 5: Track your spending for at least 30 days

When you track where your money goes for one month — all debit, cash, credit card and gift card transactions — this is where the awareness and “aha” moments happen. You’ll quickly see whether your spending aligns with your priorities. If it doesn’t, you’ll know exactly where to make changes because you’ll see where “leaks” are happening. If the spending tracking upsets you, it might be a clue that your spending isn’t aligning with your priorities, offering further motivation for change. 

Habit 6: Build daily money habits

I call them rituals. These small, daily actions create powerful results over time. They can look like a conscious choice to make a good cup of coffee at home versus buying one, or connecting with your spouse on money matters. I also love the ritual of saving a little each day, even a few dollars transferred into a high-interest savings account. This builds both your bank balance and your discipline.

Then, practice daily financial gratitude. As you measure your net worth, and monitor your budgeting, you can celebrate your wins and focus more on what you have versus what you lack. 

This article was originally published in The Star. Lesley-Anne Scorgie is a Toronto-based personal finance columnist and a freelance contributing columnist for the Star.