Smart money habits you can build fast

November 10, 2022

Olivia Jackson

Whether you believe that you live only once and should spend most of the money you make, or you feel safe and more secure when you have some cash set aside for emergencies, your habits say a lot about your relationship with money.

If you want to take control of your finances and do more with the money you have, now is the time to create some smart money habits. These are simple actions that you can take every day that can help control spending, save money, manage debt and help you achieve your financial goals.

How to form a habit

No one is born with habits. We learn them as we go. Some stick and become part of daily life. Other habits we give up on when they’re no longer needed. The best way to create a habit is to make it realistic and easily repeatable. For example, a good money habit can be as simple as setting aside a small amount from every paycheque for an emergency.

The key to getting started is choosing one or two small money goals and making them part of your everyday routine. Over time, these smart money behaviours will make it easier to manage your money because you aren’t always starting from scratch. Good habits, once learned, kick in and do the hard work for you.

7 SMART MONEY HABITS TO START FORMING NOW

1. Track your spending

A budget is the best way to track your spending. Whether you write it down or track it in an app, you may be surprised to see all the little expenses that are chipping away your paycheque and keeping you from saving money.

2. Become a super-shopper

Challenge yourself to find the best deals on everything. Searching for online coupons or discount codes could shave a few dollars off most of the things you buy. If you're looking for some other ways to make your dollar stretch check out Managing your money in times of inflation.

3. Use your debit card instead of credit

Studies have shown that most people spend more when they use credit cards instead of paying with cash or using debit cards. This makes sense because you have a finite amount of money in your bank account so you simply can’t overspend when using your debt card instead.

Consider consolidating your debt. It can give you a fixed payment that fits your budget. Learn more about when it's the right time to consolidate your debt.

4. Pay off debt

Paying off high-interest debts can take a big bite out of the money that’s left over after you pay your other expenses. Avoiding debt is a great habit to work on but it’s unrealistic for most people. Instead, try to pay off the debts with the highest interest rates and avoid running them back up again (by using cash or debit cards instead, for example).

5. Outsource a good habit to technology

Automating parts of your financial life has never been easier. Whether you bank online or in person, you can set up lots of ‘set it and forget it’ habits that require no effort on your part. For example:

Automate bill payments so you never miss a minimum payment.
Set up an automatic transfer to an emergency fund that is not connected to your debit card (it will be less tempting to spend the money you’ve saved).

6. Check your credit score

Checking the accuracy of your credit score is a free habit that can help ensure the small goals you’ve set for yourself are building a better credit score. It’s important to regularly check your credit report for things that may damage your ability to qualify for a loan or credit. Errors in your credit report could result in an unfair rating. The Government of Canada website suggests checking your report for:

Wrong mailing address or incorrect date of birth.
Payments you made on time are shown as late.
Negative information is still listed after the maximum number of years it's allowed to stay on your report.
Accounts listed that you never opened - a sign of possible identity theft.

If you want to protect your credit rating, learn more about why borrowing to improve your credit actually works.

7. Ask for help

It’s difficult to know all the answers to your financial questions. One easy habit is asking a friend or a relative, who has good money skills for advice when you need it. Most people want you to succeed and will share what they know for free.