Money Routines, Methods, Habits, Rules and Obsessions to Live By
Nov 3, 2019
I’ve recently started a ‘Run Streak’. When I tell people I’m on one they have absolutely no idea what I’m on about. So, let me explain…
Every single day I run a minimum of 1km. Fully clothed, just in case you thought the word ‘streak’ had other implications.
No matter where I am, I have to make time in my day to do this. It takes 4.55 minutes on a good day, 6.15 minutes if it’s not...
WHY DO THIS?
The main reason is that although I consider myself a runner, having started when I was about 17 while doing a milk run while wearing my sisters old running shoes that were two sizes too big (I sounded like a clown in giant shoes running down the street; flop, flop, flop), I sometimes lose the urge to run.
Particularly during winter down here in Central Otago - because when you are sitting inside a nice warm house looking at a -5 frost outside, well, the thought of heading out there loses its appeal somewhat.
Therefore, setting a GOAL to start a run streak FORCES me to get my shoes on and get out the door, it has made me create a new HABIT, even if it’s just for one tiny kilometre. But you know what, most days I don’t stop at 1km, if I feel good, I just keep running. As at the time of writing I’m up to day 45.
During the week I ran to the playing fields and created (via GPS) this dollar sign on Strava. The dollar sign is 430 metres.
It’s just a kilometre, I can do that!
While out running it got me thinking about HABITS and ROUTINE and how important it is for not just my health and wellbeing but also for financial health as well because a lot of people get in touch with me asking how to get started and how to stay consistent with money. Because that’s the thing, you can start with a hiss and a roar but lose momentum and stop and that is a bit of a disaster for your money: work hard and pay off a credit card...then run up the bill again. That’s a habit in itself, albeit a poor one, so you want to create good, long-lasting routines and habits that set you up financially, which become so ingrained they are automatic.
A great day starts with coffee
Personally I do a number of things when it comes to money.
This arrives in my letterbox each week from Coffee Supreme.
Each morning I brew myself a large cup of strong, aromatic and delicious coffee and then I head to my computer to look at my bank accounts. And I’ve even automated THIS process with my new favourite thing, a coffee subscription with Coffee Supreme. Each week a pack of freshly ground coffee arrives at my doorstep and I REALLY look forward to this morning brew.
I sit down at my computer with my delicious steaming cup of coffee, I pat the cat who is trying to walk across my keyboard and look at my PocketSmith dashboard and just see how my finances are looking on that day. I categorise any new transactions that I need to, I look at our income versus our expenses and I also look at our net worth. If you have been reading my blog for a while you’ll know that I struggled with PocketSmith in the beginning, but now it’s a really useful tool that lets me gauge really QUICKLY if we are on track or not. If anything needs tweaking I jump onto my banking website and do whatever needs doing plus I make sure that we have enough money in the right account for our investments and bills to be paid out over the next 24-48 hours.
Job done. Then I get on with writing my blog.
Almost all of our saving and investing is AUTOMATED now
I voluntarily contribute to our three KiwiSaver accounts on the first of each month. Jonny is self-employed and I work part-time so I need to top up our accounts so we get the government tax credit each June, plus we also contribute to our 11-year-old daughter’s fund.
We are saving for our daughter to get dental work done and this money is transferred every Monday into a separate account specifically for that purpose.
Every Tuesday money automatically moves to a different bank account marked ‘investments’ and at the end of each month, I manually go and invest whatever is in here into one of the three index funds we have. This is over and above our normal investments and I do it manually ‘just in case’ things are tight this month and I can hold back this money if I need to use it for daily spending.
Each Wednesday money automatically moves to our daughters Sharesies account.
Also, saving for a future holiday is automatic, with money being transferred every Wednesday into an account marked “Holiday”.
Each Friday money automatically moves to my own Sharesies account (poor ole Jonny does not have one, but “what’s his is mine and what’s mine is his”).
On the 18th of each month money automatically goes to our SmartShares index funds.
Automate, Automate, Automate.
Do you get the idea? If I have set amounts coming out of my bank account into investments without having to lift a finger, then I know it’s going to happen every time.
Pay yourself first
Many people tell me that they also pay into their savings and investments FIRST when they receive their pay each week.
Investing is automatic, otherwise, you and I just know it won’t happen and other things will take priority. How do I know this? Well, early on in this journey I would set a calendar reminder to “invest” and many times I would forget or I would look at the share price of an index fund and think I might hold off until the price drops or goes up (i.e. trying to time the market), or I would decide we needed that money for something else that month, it’s so easy to do this and it might feel like the right decision at the time, but your future self will disagree. But now, we always invest first and live off the remainder.
All of our bill payments are automatic as well and I can see when they are going to happen on my PocketSmith home screen under “your next 7 days” and also in the calendar. There is not one single bill I have to manually pay, but it does not mean that I don’t pay attention to them. These accounts are still emailed to me and I still look at every single one, just to make sure there are no surprises there.
I’m lucky in that I speak with a lot of people who have developed really good HABITS around how they handle money, so I thought I would share some with you.
Pay off the credit card daily
Many people, like Sarah who got in touch, pay off their credit card every couple of days because they like knowing their exact position. And as she said, “I know it’s not taking advantage of free money but I DON’T CARE. I don’t want a surprise at the end of the month”. Some people think this might be over the top but the point is, Sarah has developed a habit that works for her and keeps her in control of her own money.
Check your bank balance daily
Like me, Sarah and many others check their bank balance every single morning (with coffee) and over time you develop an awareness of what’s right and what’s wrong. I’ve lost track of the number of times I have been charged twice for something, but soon after I see that overpayment credited back to my account. And if I don’t, I follow up.
Save the cents
I have heard from a lot of people who check their bank balances every morning and while they are in there they either sweep a bit extra off into savings or bring their OCD tendencies to the fore and move any cents on their account balances into savings. For example, if there is $543.89 then that 89cents goes to savings. If this is done daily, then over the course of a month the dollars begin to add up and for those with OCD, peace is restored when they see nice round numbers in their account!
Work backwards
People work backwards to achieve a goal: How much do you need and when do you need it?
If you need $10,000 in 12 months for a holiday, then you need to save $192 each week for the next 52 weeks to reach that goal. If you don’t put any structure around this then you are just guessing and are more likely to fail.
HELP! It’s an emergency
I always have an emergency fund of four to six months of living expenses sitting in an accessible bank account in case of an emergency. Our habit used to be to reach for the credit card but now I know that taking on debt is the WORST thing I could do in an emergency, so having this fund gives me insurance and huge peace of mind.
Sorry, I forgot my wallet
Here’s one I often do. I leave my wallet at home. If I’m just going to collect my daughter from school do I really need money to do this?
I sure do…”Muuummm, can I have ice cream?”
Me to her “oh sorry, I can’t get you one because I left my wallet at home…”
Too easy!
IF I do happen to end up at the shops and see something I want, chances are it will still be there tomorrow, which gives me 24 hours to think about whether I even need that item or not. Most times I don’t.
Cash or card
I just can’t get into the habit of using cash, mainly because I always run out of it…
So, using a debit card is my routine and for me, it does not mean I wave or swipe without realising it, I know where I’m spending, it’s just far easier with a card for me.
Delayed gratification
If you do want to save up for something whether it be Christmas, a holiday or a comfortable retirement, learning the habit of ‘delayed gratification’ is crucial. Learning to wait is easy for some, but incredibly difficult for others, but I’ve noticed that those who succeed with money manage to not shop on a whim, but instead delay their spending until all of their ducks are in a row and the time is right to spend, plus they are less likely to have buyers remorse. Some even practise meditation and visualisation to imagine their life with or without that thing they want to buy. I’m quite an impatient person, but investing has taught me to be patient and play the long game because my future self will say “thanks so much!”.
Draw a picture
Download and print out The Happy Saver Financial Goal Tracker as a visual way to track a financial goal.
Many people are visual with their goals and they create a mind map or a picture so they can see them on a regular basis - they put their mortgage payments smack bang on their fridge or they put their savings goal on their bathroom wall. Others use bunting or a paper chain for either debt payoff or to reach an investment goal. Many use a visual savings tracker which they fill in as they reach each milestone. I follow lots of these people on Instagram and get excited for them as they work towards their goal.
Jonny created this simple Financial Goal Tracker that you can print out and then colour in each block as you reach each amount on the way to achieving the overall goal. CLICK HERE to download a printable PDF.
Take a photo
How about if you are a spender and you just can’t seem to stop yourself? Keeping a photo of your goal in your wallet or ON your credit card helps. It’s a visual reminder to STOP and evaluate the thing you are about to buy and ask yourself “is it helping me towards my goal or preventing it getting me there”?
$21 for groceries
Many like to kick start a habit with a challenge, much like I have with getting my running back on track with my run streak. There are all sorts of challenges out there but something like the $21 Challenge, where you can only spend that amount on groceries for the week forces you to rethink how you spend and cook using only the food already sitting in your pantry.
Start tiny and grow
If you want to create a new habit of setting some money aside for investments, start small and build up. Many people feel like they are sending their money off to a big ole bonfire when they start to invest for the first time and they are wondering “will I ever see that money again?” So, to test the waters they start really small, maybe just $5 or $10 a week. A month or two in they notice that their money is STILL THERE, and it emboldens them to invest more and they increase the amounts. Start small, learn the system, educate yourself and build it up.
Do it, do it now!
Sometimes waiting is detrimental to your finances. Procrastination certainly is, so creating a routine of reviewing your money is well worth it. Been putting off working out which KiwiSaver fund you should be in because you know the default fund is a DUMB idea? Put a date and a time in your calendar and promise yourself you won’t go onto the next thing until changing to a different provider is DONE. Honestly, take it from me, it does only take a couple of minutes! Do it, do it right now! While you dither, you are losing money.
Budget
I’ve met many people who have created a household budget for the first time to get a handle on their spending. Apparently my subconscious feels quite strongly about budgeting because I had a dream about it the other night…
I was in a meeting when a guy started complaining about how he had “too much month and not enough money” and that life was hard and tough and he was feeling very sorry for himself. The other person in the room was showering him with sympathy and trying to console him saying things like “life is hard, life is tough, you poor thing, but what else can you do but accept it?”.
But I had no time for this softly softly approach and said, “it’s pretty straight forward mate, you just need to write down how much money is coming in and where exactly you are spending it and pretty quickly you will probably find ways to reduce those expenses ONCE YOU KNOW WHAT THEY ARE. Get over yourself, you just need to learn to budget”!
They both looked at me like I’d grown horns and went back to their conversation of “there there, life is tough, life is hard, I really sympathise with you, I’ve tried to budget and it does not work, I am the ONE exception to the rule. Sigh”.
I got up, shaking my head and as I was leaving the room and leaving the building I started shouting louder and louder and louder “YOU NEED TO BUDGET, YOU NEED TO BUDGET, YOU NEED TO BUDGET”...
Hah!
So, um, yeah, most people who succeed with money have a very clear idea of where their money comes from and goes to, they all have the habit of keeping a budget. In some way, shape or form they all have the routine of keeping a budget, no matter their income level. Use a pen and paper, use a spreadsheet you have created yourself or use an online service you pay for, it does not matter what you use, as long as you use something that works for YOU.
Earn more
An excellent habit to get into is to always be looking for opportunities to earn more money. Whether this is a career change, a pay rise in your current role, starting a side hustle or having a garage sale. Getting more money coming in is generally always a good idea.
What’s for dinner on Thursday?
Many people tell me that they plan all of their meals for the week ahead and then shop using a list on a set day each week, with the kicker being that when they go to the supermarket (or shop online), they actually STICK to that list. Jonny and I implemented Sunday shopping because we were opening the fridge at 5pm each day, wondering what to cook, finding that all of the ingredients in there were not quite what we actually felt like eating that night, so headed down to the supermarket instead. We were doing this every other day and our food bill was skyrocketing AND we were wasting a lot of food as well. And time, it’s a huge waste of time too. Since establishing a routine of using a meal plan, creating a list and shopping once a week we have really reduced costs. Plus it makes the “Mum, what’s for dinner” question so much easier to answer.
Google it
Do your research before you shop. This is my least favourite thing, but Jonny likes it THANK GOODNESS, so if we are in the market for something new, he will look at ALL of our options for the best price, best quality, discount code etc. If it means holding off the purchase until a better deal shows up then we will.
Find Friends
Jonny is my secret weapon in a lot of ways because we talk about money together and we can bounce ideas off each other.
Jonny to Ruth, “Should I buy Bitcoin?
Ruth to Jonny “No”...
FYI Jonny put $1,000 into bitcoin and its current value is $1,325.
Jonny to Ruth “You should have let me buy it five years ago and I could have sold it two years ago and made heaps”!
Hmmmmm.
Do you know what ‘financial infidelity’ means? It’s when one person is doing all they can to stick to a spending plan and behind their back, the other goes out and spends up large or gets a credit card that the other one does not know about. It’s not quite as bad as having an affair, but it’s getting up there because being able to trust your partner is a habit we all need to be able to rely on (in case you were wondering, given the previous paragraph I did know he was buying Bitcoin). Find someone you can talk about your money with and this will keep you accountable and will just help you learn and work stuff out. And don’t discount the online community to find this friend either, I’ve made some great friends through writing this blog, a community of wonderful people who just want to help each other succeed.
Always be kind
And finally, just to show that it’s not all about me. As a matter of routine, we regularly give our time to help others and we also give money. As our financial situation improves it’s my intention to give more of both so this habit is very much a work in progress. Currently, I give more of my time than my money, but I’m laying the foundations of kindness and generosity now so that I can build on them in the future.
Give thanks to the universe
Plus I take time to be grateful for what I have. That’s why I like the routine of going for a run, it’s my time to let my brain have a good old THINK because I don’t run with a podcast or music playing, I just let my brain go wherever it wants to go and just have a think about things and this always has me thinking about the things that are GREAT and the things I’m THANKFUL for and I believe this is a very good habit to get into, to think about not just what's wrong, but more so if I can, think about all the things that have gone RIGHT.
So, with that being said, it’s now 7am as I finish writing this, I think I’ll go out for my run and have a think about things….
