Mastering Your Money: Essential Financial Habits You Need to Adopt

There are a range of property investing strategies out there to help you get an edge over the competition.

From the classic buy and hold, to the higher risk fix and flip, there are no shortage of methods and theories – and no shortage of opinions on each of these as well!

And while developing your knowledge and understanding of these strategies is really important, no property investor can succeed without adopting these habits. 

Why is developing good financial habits essential?

You may have a really good understanding of property investing. Perhaps your initial strategy has started to work and you’ve already started to see positive cash flow on your property, or perhaps  it’s slowly starting to increase in value.

But without effective money management skills and habits, there’s a good chance you won’t be in control of your finances and may even start to lose out in the long-run.

Good financial habits are the bread and butter of property investing – it’s a great place to start and you can apply it to a wide range of investing opportunities!

Financial habits go hand-in-hand with wealth creation strategies, and are critical in achieving long-term financial stability.

It’s also wrong to assume that just because you’re experienced in passive real estate investing, that you can’t fine-tune your existing habits. Whether you’re new to investing,  or have some experience under your belt, here are some key financial literacy tips that you can apply to your investing lifestyle!

Budgeting

This should come as no surprise – a key part of financial success is budgeting!

While easy to understand, it can certainly be difficult to master. Budgeting is the foundation to developing good financial habits.

Budgeting requires more than just a rough idea of your expenses and income. It should provide a comprehensive overview of what you are spending over a certain period of time, the income you’re generating from your job and assets, as well as any saving targets you have in mind.

It helps to categorise these expenses into essential costs (i.e. rent/mortgage, bills) and discretionary (what you may spend on entertainment and leisure). This will help you figure out what you can cut down on and where. 

Set limits and saving goals that are realistic so to not become discouraged by not meeting strict saving limits. 

Remember, it’s okay to not meet that budget target every once and a while. What’s important is to remain as consistent as possible over a longer period of time. 

Systematically review your budget and adjust accordingly to accommodate any new circumstances that may arise.

Intelligent saving and investing

A key habit to develop is consistent saving when possible, and investing that money the right way.

For example, if you experience an unexpected financial lump sum (i.e. a gift, beneficiary in a will) the first thought should be how this can be invested. 

This also requires putting some money away each week to invest. 

This saving strategy should cover any long-term or short term goals. While you may not necessarily know where to direct the investment initially, putting money away each week means you’ll have finances available when you’ve decided where to invest.

This fund will assist you in emergencies or come in handy when unforeseen circumstances arise.

It may even be worth setting up automatic transfers to separate accounts designated for saving purposes.

Once you’ve got saving all taken care of, it then becomes about investing. Explore a range of investment options, whether it be property, stocks or some other option. Smart investments start with knowing your risk tolerance and financial objectives. 

Yes, this may mean some lifestyle sacrifices, but intelligent saving and investing here is a critical habit to develop. 

And this doesn’t have to be a considerable amount either: just a bit here and there. It all helps!

Educating yourself

We mentioned before that some investors may feel that these financial habits come naturally at this point. 

But being complacent and thinking you have a complete understanding of property investing can actually have a negative effect.

A critical habit that investors should develop to truly master their money is to always look for opportunities to learn. 

The finance world is complex and always changing. That’s why it ‘s so important to stay informed on the latest financial news, investment strategies and trends in the market.

Take advantage of all the free resources at your disposal. From books and newspapers, to podcasts and workshops, there’s no shortage of information on offer. 

Staying up-to-date on the finance world can help you avoid costly mistakes, make informed decisions, and think of new ways to make passive income. At the end of the day, it will give you the edge over the competition. 

The value of financial knowledge should never be underestimated!

Managing debt

Keeping track of your debt will give you the best chance of mastering your money and is a key habit to develop early in the investing journey.

It’s all about getting in control early. Prioritise payments on high-interest debt first. This may include credit card debts and other personal loans. 

To alleviate high-cost debt, consider making the most of:

• Balance transfers 
• Debt consolidation strategies
• Negotiating lower interest rates with lenders

It’s really important that you stay on top of any debt that you’ve accrued, as this can have an effect on your credit score and future financial opportunities.

At the end of the day, managing debt will not only improve your financial situation, but also lighten the mental burden and ensure long-term financial freedom. 

It’s also important to remember not to be afraid of debt. There’s a difference between good and bad debt, as discussed in the video below. Learn the power of leveraging to grow your property portfolio. 

The bottom line

These habits should be adopted as early as possible to give you the best possible chance of achieving your financial freedom. 

While it may require some discipline, dedication, and a bit of sacrifice here and there, adopting the long-term perspective on finance will give you the best possible chance of success.

Your financial stability and wealth creation start with these essentials: budgeting, saving, investing, self-education, and managing debt. 

Embrace these financial habits and truly master your money.