5 Financial Habits To Create For 2023: Make This New Year The Best Ever

The New Year…..

Is a time for reflection and regeneration. It’s a time to start fresh and fix things you wish you would have done the previous year.

It’s also a time to create new habits that will benefit you in the coming year.

A lot of people like to use “goals” when talking about New Year’s Resolutions, but I do not.

A goal is simply a way to track and measure progress…. that’s it.

Because of this, goals are easy to break.

If your goals are too lofty, you may become overwhelmed and intimidated. This can cause you to not even try or get down on yourself when things do not go the way you planned.

I prefer to use the term, “priorities” because this is a COMMITMENT you make to better yourself.

The results of setting priorities are to develop actions that benefit you in the long-term.

These actions are called……. habits

Why Are Habits Important To Develop?

Habits are actions that take some practice to develop and are long-lasting. If you want to change behavior, you need to create a habit to change that particular behavior.

Goals are important for measuring progress but are not effective for changing behavior.

Therefore it is important to create habits.

It’s been said that it takes about 3 weeks of daily effort to create a habit.

While it takes some effort, once the habit is created, it’s easy to maintain.

Think of it this way, creating good financial habits is like learning to brush your teeth. It took several attempts as a child to start the habit, but now it’s automatic.

Developing good financial habits follows the same process.

When things get tough, you lean on the habits developed.

Do you know what financial habits you may need to develop? If no, below are 5 suggestions for developing habits this year to get you on the right financial foot.

Let’s get started!

Identify Skills You Want To Learn

Identifying what skills you need to improve your financial life and learning new things opens your mind to possibilities.

In today’s fast-moving world, it’s been said that the knowledge you have now will be obsolete in 5 years….. 5 years!

This is why it is so important to be a lifelong learner and to continuously grow your skill set.

Not sure where to start?

Here are a few suggestions:

• Cryptocurrency
• Stock investing
• Real estate
• Budgeting
• Saving money
• Reading financial statements
• Side hustle skills (i.e. programming, web design, bookkeeping, proofreading, etc.)
• Day job skills needed for promotion (earn more $$$!)

Educate Yourself

Once you identify the skills you want to learn, next you need to find resources to educate yourself.

One of the best ways to educate yourself is to read books or listen to audio books (my wife’s favorite! 😊).

Reading about personal finance is one of the best ways to gain knowledge about money.

Let’s face it: none of us were taught personal finance in school and most of us didn’t learn it from our parents either. It’s up to us to teach ourselves.

There are a lot of fantastic books out there to learn about budgeting, investing, retirement, mindset, and other key skills to build and develop.

Your local library has all kinds of personal finance books on their shelves or use their audio books via Libby.

Want another great resource that is relatively inexpensive or maybe even free? Try Audible.

My wife has been a customer for years and loves it. They have a free membership to get started with and a premium membership you can upgrade to at about $15 a month.

If wanting a list of books to get started with, here are some I recommend:

• Rich Dad, Poor Dad – a classic and a must read! Easy reading yet impactful. Really set my mindset for learning how to invest.
• How Much Money Do I Need To Retire – another must read book. I don’t know about you but every retirement calculator I ever used gives me a totally different number to shoot for. This book changes all that. You’ll walk away equipped knowing how much you really need to achieve financial independence and learn a lot along the way.
• The Millionaire Next Door – a great book to learn that you don’t need a PhD in finance or inherit a ton of money to become a millionaire. Its highlights several trends they found among investors that you can learn from and implement.
• Killing Sacred Cows – A New Yor Times best-selling book by Garrett Gunderson. I’m still reading this book as of this print but am loving it. Another great book about mindset, financial myths he convincingly debunks, and discusses the need for alternative investments.
• Rigged – This is an extremely valuable and surprisingly easy-to-read book. The book talks about how the financial services and investment advisory industries really operate and why life insurance is a valuable tool to use in your daily life.
• Grit – Not all investment knowledge comes from finance books. Grit talks about the need for effort since its effect compounds over time. A great book for learning the right mindset for finance, achieving career dreams, and so much more!
• Crucial Conversations – a great book if wanting to learn the art of negotiation. As Christopher Voss (Founder of the Black Swan Group) states, “Everything in life is a negotiation, from crossing the street to receiving a raise”. Crucial Conversations starts you on the path to learn how to properly navigate tough yet productive conversations.
• 7 Habits Of Highly Effective People – Another New York Times best-selling book that is a classic and must read! In it, learn the 7 habits Stephen Covey uncovered about the most effective and productive people. The lessons learned can be applied to virtually every facet of your life.
• How To Make Your Kids A Money Genius (Even If You’re Not) – a great book if struggling to teach your kids about how to manage money. It has practical lessons for any age, and we are currently using to teach our kids about money.

Here are some other books on my list that I am working on reading in the near future:

• The Richest Man In Babylon
• The Simple Path To Wealth
• The Leverage Equation
• Change Your Thinking, Change Your Life
• Be Your Future Self
• Become Your Own Banker
• Building A Warehouse of Wealth
• Daring Greatly

Finally, if you are more of a blog article person, check out the blog posts offered by M1 Finance. M1 Finance talks in details about investing in stocks, bonds, ETF’s, crypto, custodial accounts for your kids, and much more.

I love the tools they offer and have a great platform for getting started with your investing journey.

Learn more about M1 Finance here.

Become Organized

Since you are looking for a fresh start to the new year, one of the best habits you can start is to learn to be organized.

Why does this matter with personal finance?

Being disorganized wastes a lot of time and energy that could be spent on other things. One thing you cannot buy is time so every minute you free up is very valuable.

Freeing up time can be used for a variety of things from learning new skills, educating yourself, maintaining a budget, etc.   

Don’t believe me?

Here are some statistics I found from Simply Productive:

• Eliminating clutter saves 40% of all housework (I can vouch for this one! Lol 😊).
• 23% of adults pay bills late or incur fees because they can’t find their bills (sounds like my brother-in-law! Lol just kidding 😊).
• 80% of medical expenditures is stress related and leads to $300B a year in medical costs and lost productivity.
• Using the correct organizational tools can improve time management by 38%.
• On average, office workers waste 40% of their workday due to a lack of organization.
• 55% of consumers surveyed (400 people responded) stated they would save a minimum of 30 minutes to more than 60 minutes each day if they were properly organized.

Now for the $10,000 question, how to get started?

You can start by doing the following:

• Decluttering your filing cabinet of old documents or bills
• Buy a filing cabinet and file folders to get organized
• Go thru your digital files and purge things you do not need and are older than 2 years
• Setup calendar reminders when certain bills are due
• Automate deduction of expenses from your primary banking account that occur at regular intervals (mortgage, electricity, water, credit cards, etc.)
• Develop a budgeting routine
• Write down your to do lists on paper or use your phone to track a list

Take it from me, being organized reduces anxiety, saves me a TON of time since I do not have to search for things, and overall makes my life much more efficient and productive.

As they say, “an ounce of prevention is better than a pound of cure!” 😊

Take Action

While I’m a planner by nature, all the planning in the world does not matter if no action is taken.

Working with engineers, I have met several over my career that suffer from “analysis paralysis” because they wanted it to be perfect and were afraid of making the wrong decision.

They will sit and lament and debate instead of pointing their compass at a north star, following a path, and course correcting as needed.

A good habit to get into once you plan things out is figure out how to make it happen and what you need to be successful.

The question you might be asking is how to get started?

It’s simple, just do it!

According to Angela Duckworth, who wrote the book “Grit”. Effort is the key to success because it counts twice on the path to achievement.

Here is the formula she uses:

Achievement = Skill x Effort

Skill = Talent x Effort

In other words, effort compounds talent which leads to achievement.

So just get in the habit of following thru with actions. If it works out, Great!

If not, so what? Just try again.

If struggling to start a habit, then start small…. really small.

I read a book, “Atomic Habits”, where they talk about starting extremely small actions that consistently compound over time.

Wil Smith talked about “laying the best brick that you can every day and pretty soon you build a wall”. It was a great video on YouTube, and I attached below:

Wall Smith and Laying Bricks Every Day

This is what atomic habits is all about.

So go lays some bricks, break some eggs, and make it happen because done is better than perfect! 😊

Create And Stick To A Budget

For those that have read some of my past articles, you know I preach how important it is to make a budget and stick to it.

I talked a lot about budgeting here:

• Why Debt Is Not A 4-Letter Word
• How The 50/30/20 Rule Works
• Why Budgeting Sucks and Why It’s Important

A budget is all about figuring what is important to you, prioritizing it, and assigning money to it.

A budget is essentially giving your money a job.

Without a budget, you have no idea how much or where your money is going.

For example, it shocked the he$$ out of me years ago when my wife and I sat down to create our budget. I couldn’t believe how much we were spending on food and medical bills each month.

No lie, our food budget and medical bills budget was larger than our mortgage…. by ALOT.

Budgeting our money was a HUGE wake-up call and drove us to take action to right-size our finances.

If struggling to figure out where to get started, I talk about the pro’s and con’s of different budgeting methods and what I do here:

• Different Strategies For Budgeting Your Money

I use a budgeting tool I developed and have attached it here. Feel free to download it and use it if you choose to.

Free Budget Tool

There are also some great budgeting apps I use to double-check my work.

For example, Mint and Personal Capital are 2 of my favorite budgeting apps.

M1 Finance also has a ton of great articles about budgeting, investing, and much more. They are my go-to resources for learning about personal finance.

Whatever method you choose to use, make sure it works for you and don’t be afraid to modify if needed.

Trust me when I say budgeting is, hands down, the best thing you could possibly do for your finances and to get your financial life on the right track.

Final Thoughts

Let’s go over the 5 financial habits you can start today to make 2023 the best year ever!

• Identify Skills To Learn
• Educate Yourself
• Become Organized
• Take Action
• Create And Stick To A Budget

Make this the best year ever by starting off on the right foot with good habits. Start small and lays some bricks each day. Before you know it, you’ll be able to stand back and admire the new financial house you built! 😊

Which habit will you start working on? Why? Send me an email. I’d love to hear from you.

Until next time…….

Live The Life You Love, Want, And Deserve!

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