Written by Alex Seleznev, MBA, CFP®, CFA | Feb 14, 2024
Goals are aspirations you set for yourself and they can be small or big.
They are a great way to prioritize behavior and measure success.
However, they are not always very effective at creating changes in behavior.
On the other hand, habits are the routines you develop through constant practice, and they occur subconsciously.
Habits create the behaviors you need to achieve success.
Below are the top five habits to develop for financial success.
#1. Spend Time on Financial Literacy
Many successful professionals struggle with their finances.
In many cases, the root cause of the issue is not money but lack of financial literacy.
Dedicate at least one hour each week to financial literacy.
This will likely be one of the best time investments you will ever make.
Books and magazines are your best choices.
Beware of questionable “tax hacks” and “get-rich-quick schemes” that are all over the internet, podcasts, and even radio.
#2. Pay Yourself First
Let’s be honest - budgeting is not for everyone.
If you struggle with the traditional approach to budgeting, consider saving first and only then spending any remaining funds.
The beginning of the year is the best time to establish or evaluate your existing “pay yourself first” strategy.
#3. Regularly Review Your Finances
Review your bank and investment statements monthly or at least quarterly.
Meet with your significant other to discuss family finances at least every six months.
Review your net worth and compare it with the previous year at least annually.
Don’t be afraid to mark your calendar to perform these tasks.
Becoming financially successful is no different from maintaining a reliable car or exercise routine.
#4. Gradually Increase Your Savings
For many, maximizing retirement savings can be a difficult endeavor.
But it doesn’t have to be.
For example, if you are struggling to maximize your 401k contributions, which is $23,000 in 2024, consider automatically increasing them by at least 1% to 2% each year.
You will likely be on track to maximize your retirement savings in a short time.
#5. Periodically Review Your Investment Mix
You cannot control the market.
It’s smart to have a goal of having X dollars in Y years, but it still doesn’t guarantee achieving your desired results.
What you can fully control is your investment mix.
At the basic level, this is the split between stocks and bonds in your portfolio.
Make sure you have the right investment mix and review it at least annually.
In many cases, people who are financially successful are not necessarily those who earn the most money. Financial literacy and good habits are just as important as focusing on your earnings.