Habits Trump Goals

Welcome back to your weekly three-minute dose of money wisdom. We hope you’ve enjoyed a nice break and you’re ready to be that little bit more awesome with your money in 2025.

We hear a lot about goals, goals and more goals at this time of year. Truth be told, we like financial goals but they are far from essential. And setting financial goals can be problematic for a variety of reasons. So, while goal setting can be a powerful tool for some, everyone can benefit from focusing on forming good money habits that step you towards your long-term financial objectives.

Let’s take a quick look at some of the issues with setting goals

• Goals can be intimidating. Many of us set a goal but don’t realise what we need to do to reach it. This is particularly important with money as taking the wrong action can make your situation worse
• At times, we may not have anything that we really want to achieve. We may have a general idea of the kind of outcomes we desire, but nothing crystal clear
• Goals can be difficult to stick with. For example, the goal of saving requires self-discipline and each time a new cost arises we have to re-test our plans.
• Goals might be created simply because you feel that you need to have goals. Don’t let FOMO from a hot share tip at the BBQ become a goal you never knew you needed to have

And finally, even the best-intentioned goals can be derailed by things completely outside our control. A common example of this might be aiming to retire at a specific age but then financial markets impede your short-term financial wealth.

Focus on good money habits

We REALLY want you to have good money habits!

This quote from James Clear sums it up well…

"It is easy to get bogged down trying to find the optimal plan for change: the fastest way to lose weight, the best program to build muscle, the perfect idea for a side hustle. We are so focused on figuring out the best approach that we never get around to taking action. As Voltaire once wrote, ‘The best is the enemy of the good.'"

As we’ve said many times over, you don’t need the best investment, you don’t need lots of money. What you need is to take action by using good money habits. If you continue to apply these good habits over and over, for likely a long time, you’ll very likely become a financial winner! Being good with money isn’t meant to be exciting, the exciting bit is what you can do with the money and financial security.

4 good money habits to try

So, from a financial perspective, if you want to improve your financial situation, what are some simple ideas you can turn into habits to set you on your way to being a financial winner?

Here are four good money habits you can do today:

1.  Pay yourself first

Most people spend first and then save what’s left over. Instead, switch this around and create the good money habit of saving some money before you go spending. Simply transfer an amount of money each pay, as much as you comfortably can put aside, and invest this money, pay down debt or simply sit it in savings (for now). You might be surprised by how quickly it grows.

Make this automatic and it’s a guaranteed habit.

2.  Start a Conscious Spending Plan

Grab a piece of paper (or your Money Plan) and make two columns. In column 1 write down what income you receive after tax. This would be your pay each cycle, perhaps Centrelink support, rental income, your partners pay and any other income you think of. In the next column, write everything you spend money on. Make a note next to each spending item so you know if its an essential spend or something you are choosing to spend your money on. Work out how much money you have left over after all your spending, and out of your spending, work out how much of it was essential.

Each time your income or expenses materially change, grab your piece of paper and update your numbers. Now it’s a habit!

3.  Find some easy savings

Now that you’ve listed down your spending, it’s time to look at where you can save some money so you can use it to either build wealth or invest in your lifestyle. Out of the essential spending items, which ones can you potentially make some savings on? Can you negotiate better terms with the provider, change providers, or cut back on the service provided? Look at your choice spending (the non-essential items) and decide if any of this spending could be better used elsewhere. Are you getting value from the spending? Does it align with what’s most important to you? Try and tackle the cost that can save you the most money, or the cost that is the easiest to cut out with minimal pain.

Make it a habit to regularly check shopping bills or credit cards statements so you’re mostly aware of your spending.

4.  Destroy your debt!

Chances are you have debt. Debt can be a wealth and sanity killer so it’s really important to understand your debts and pay each off ASAP. Get clear on what debts you have, the balance owing, interest rate and current repayments. Once you are clear on your debt situation, focus on paying off the debt that you’re being charged the highest rate of interest on (this is usually your credit card). Once you have killed off this debt, go the next most costly debt and do the same. Be realistic and stick to your plan (this can take time). Tax returns can be a great way to get a jump start on paying off these expensive debts. If you happen to have some small debts that can easily be wiped out before you tackle bigger debts, then go for it and celebrate the win.

For those of you unaware, our Monthly Money series targets each and every one of these habits (we help you revise each habit and take any necessary action). We encourage you to start the habit now and you can be assured that we’ll be in touch throughout the year to give you a nudge to keep the habit going.

Remember, being good with money isn’t complicated. You need a sensible plan and some good long term money habits, and the rest will happen over time.

As always, if you have any questions or need a hand, please shoot us an email at [email protected]

Cheers,

Dan and Dave