Becoming a Financial Late Bloomer - Phase 3: Build Your Habits and Routines
Hello hello! This is the third in a series of four posts about how to become a financial late bloomer.
As a reminder, and in case you haven't read the first or the second posts, a financial late bloomer is someone who actively started managing their money and building wealth later in life. In the first post of the series, I focused on gaining full clarity of your financial situation by doing a spending analysis, finding out how your spending and saving compares to the 50-30-20 “rule”, and calculating your net worth. In the second post of the series, I focused on gaining control of your money by using zero-based budgeting, automating your finances, and simplifying your bank account.
If you have decided to become a financial late bloomer and followed the six steps in the first two posts, you would be rocking it by now with clarity and control! You know exactly where you stand financially and you have the systems in place to have full control of your money. Amazing!
But what’s missing? Like anything in life that you are focusing on or trying to change, consistency is key. You might be motivated to make a change (remember the “ready to bloom mindset” I wrote about in the first post?) and you have have happily carried out the action items I recommended in the past two posts, but, after awhile, like with anything else in life that we are trying to change, your motivation might decrease over time until things to start, well, slip….
In this post, I’ll focus on consistency. I’ll go through two key areas that fit under the over-arching banner of consistency: routines and habits.
Step 1: Create Your Money Management Routines
So, you’ve started zero-based budgeting, set up a few automations, and simplified your bank accounts. The next step is to focus on what you do every day, every week, every month, and even every year. Let me be clear: there is no ideal routine here. The key is to decide what your routines will be and start integrating them into your life, little by little. You might have a daily and weekly routine or a daily and monthly routine. I suggest just starting and picking the routines that work for you. For example, you might figure out a daily routine that you do every morning and a weekly routine that you do on Sunday afternoons.
I’ll describe a few of my own routines as an example. I am a “YNAB-er” so many of these are specific to YNAB but they can be carried over into any zero-based budgeting system, including old-fashioned envelope budgeting (which I use as an analogy with my clients all of the time).
My daily routine is that every morning when I sit down at my desk and before I start work, I open YNAB, input any new transactions that haven’t made their way into my account register yet, reconcile my accounts, check the “available” column on the budget screen, and cover any overspending. That’s it! It usually takes about 5 minutes. I like checking my budget every morning before I do any spending for the day. You could stretch this type of check-in to every other day but I love doing this, so this is not a hardship for me. I’ve found that if I stretch it any longer than every other day I creep into tracking mode and away from being proactive and mindful about my spending.
I also have a monthly money routine that takes about 15 minutes that I do on the first day of the month. My monthly routine involves transferring money to my personal account from my coaching business account, moving money from my “next month” category into “Ready to Assign”, and then assigning this money to my categories for the month. The rest of my monthly money moves (try to say that three times fast) such as paying my credit card, transferring money to the account I share with my husband, and investing are all automated. I talked about the importance of automation in the last post.
Step 2: Strengthen Your Money Habits
Routines are regular activities that you do on a daily, weekly, monthly, or even yearly basis. They are structured and intentional. Money habits are different - they are patterns of behavior that are ingrained and automatic and they aren’t consciously planned for a particular time period.
Some examples of good money habits are as follows:
Check your budget before spending. This is easier said than done but will go a long way towards being more mindful about your spending. I advise my clients to “find the money first” .. meaning, if you are going to overspend a category decide where you will pull from to cover it before you make the purchase.
Budget your money as soon as it hits your account. In YNAB, this means moving the money from “Ready to Assign” to your categories. Give those dollars a job!
Track spending as soon as it occurs. In YNAB, input the transaction on the mobile app right after it occurs. It only takes a second and will make your daily reconciliation routine even faster.
Research before purchasing. Making a habit of researching products or services before making purchases can help you find the best deals, compare prices, and make informed decisions. This habit can lead to significant savings over time by avoiding impulse buys and finding the most cost-effective options.
These are great habits but how can you make them stick? First, I recommend picking one or two to start with rather than trying to implement them all at once. Second, figure out a way to remind yourself of the new habit you are trying to create. For example, if you’re working on tracking your spending as soon as it occurs, you could set up a location reminder on your phone to remind you to input any new transactions as you are leaving a particular store, like your regular grocery store. You could also have a reminder to look at your budgeting app pop up automatically when you unlock your phone. Another popular option is “habit stacking” where you pair the new habit with something you really enjoy, like having your morning coffee. I have some clients who have started to have weekly money chats that they’ve paired with going for a drive, an activity they enjoy doing together. Finally, you could use post it notes to remind yourself of the new habit you are working on as well as the reason why you’re working on it. After awhile, the habit will become more ingrained and you won’t need all of these little tricks.
Conclusion
As you embark on your journey to becoming a financial late bloomer, focusing on routines and habits is essential. While gaining clarity and control over your finances sets the foundation, consistency through established routines and ingrained habits is what will carry you forward.
Creating money management routines involves identifying daily, weekly, or monthly tasks and integrating them into your life gradually. Whether it's a daily check-in with your budget or a monthly financial review, consistency is key.
Strengthening money habits complements these routines by ingraining mindful behaviours into your financial decision-making process. Whether it's checking your budget before spending, allocating every dollar as it hits your account, or tracking expenses right away, these habits foster financial mindfulness and responsibility.
Building your habits and routines isn’t as easy or quick as calculating your net worth, setting up some automations, or designing your initial budget but it’ll definitely be time well invested.
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