Seven Habits for a Financially Fit New Year

Mary Hunt

Everyday Cheapskate

Personal character is made of habits and habits come in two varieties: good and bad. The secret to learning good habits or breaking bad ones is found in conscious repetition. To create a habit, you must repeat an action over and over again until it becomes a natural response. To break a habit, you must to create a new one or choose not to do something over and over until it becomes a natural response.

Want to become more financially responsible? Consciously focus on the following practices. Repeat them over and over until they become natural responses. Before you know it, these will be your habits, too.

Habit 1. Regularly balance your accounts. Financially responsible people calculate a current balance in their checkbook or online account after every transaction. They know where they are at all times.

Habit 2. Save money consistently. Financially responsible people do not spend all the money they have and then rely on credit. They always save some and they do it first, before they pay anyone else.

Habit 3. Think first and spend later. This is the habit that keeps financially responsible people from spending money they don't have. They do not buy things impulsively. They make lists, weigh the consequences, wait for sales and above all, exercise self-control.

Habit 4. Focus on the real price. Financially responsible people see through the come-ons, marketing hype and financing options. They know how to calculate the bottom line. If they can afford the full price, fine. If not, they are not interested in monthly payments.

Habit 5. Know your financial condition. Financially responsible people know within a few bucks the current balance on their mortgage, their investment accounts and other assets. They make decisions based on how their net worth will be affected.

Habit 6. Refuse unsecured debt. Financially responsible people shun debt of all kinds, but especially unsecured debt. If they have secured, i.e. mortgage debt, they repay it rapidly.

Habit 7. Make principle-based decisions. Financially responsible people make financial decisions based on principles, not feelings. They know their feelings are fickle and can change.

Experts in human behavior say it takes 21 repetitions to break a bad habit or to establish a new habit. That means if you do something every day, after three weeks it will become a nearly automatic response, a habit. Continue for another 21 days and you will have established a life-long habit. It takes just six weeks to change your life.

It is possible to learn good habits and unlearn bad ones, even those that are deeply ingrained. It's all a matter of choice and determination!