Your financial habits are one of the key factors in achieving your goals over the course of your life.
Though your investment returns play an important role in this, it’s how you manage your money and your income that can ultimately lead to success. And of course, your spending and saving habits might change over time.
For example, Christmas can be a time of overindulgence and overspending. Though it’s wonderful to be able to treat yourself and your loved ones at this special time of year, it’s vital to keep an eye on your spending habits as you enter the new year. If you were to continue to spend like you do at Christmastime all year round, you might find your ability to invest and progress towards your long-term goals is hindered.
To prevent this from happening, it can be helpful to think carefully about the habits that will support you in achieving your goals over the coming year, and which you want to leave behind. Bad habits are easy to slip into unintentionally. Fortunately, with a little effort, a clear plan, and goals in mind, it can be equally as easy to pick up a good habit.
Read on to find out more about simple yet effective financial habits that could help you to work towards your long-term goals and improve your financial wellbeing in 2025.
1. Pay your “future self” first
Effective financial planning is all about balancing your present income needs with your future goals. Though it’s important to be able to enjoy your lifestyle today, you also want to be sure you’re setting enough aside to be able to achieve your goals later in life.
One way to do this effectively is to pay your “future self” first. This refers to the habit of setting money aside, such as contributing to your investment portfolio or pensions, before you spend on lifestyle preferences today.
You can do this by setting up automatic bank transfers each month to your investment or savings accounts, then viewing the remaining income as your spending money for that month. Consequently, you can enjoy your income while also knowing that you’re making consistent progress towards achieving your goals for the future.
2. Avoid paying attention to unhelpful news sources
You might be in the habit of checking the news every morning, or perhaps several times a day. While it can be helpful to remain up to date on current affairs, this habit might be less helpful for managing your money.
Headlines about stock market volatility or specific stock price changes can easily spook even the most experienced of investors. When you read these stories, it can trigger emotions such as panic, fear, or despair. These are powerful emotions that can influence your investment decisions against your better judgement.
So, in 2025, make it a habit to avoid paying attention to the daily financial headlines. Instead, turn your attention to:
- Your own long-term goals
- The progress you’ve made towards those goals so far
- The long-term potential of your investment portfolio to help you fulfil your ambitions.
Regular meetings with your financial planner can help you put any negative headlines into context and reassure you that you’re on the right path. What’s more, tuning out the noise of the headlines can help to reduce stress so that you can focus on the things that will take you closer to your goals over the long term.
Read more: Is learning how to pay attention to the right things the most important skill for investors?
3. Involve your family and loved ones in financial decision-making
Talking about money, in particular inheritance, can be tricky, and for some it may feel very uncomfortable. As a result, you might be in the habit of keeping your financial goals, decisions, and worries to yourself. But the truth is, having these conversations early on can save your family a lot of heartache and stress later down the line.
A habit that could serve you well in 2025 is to involve your family and loved ones in your financial decisions. Perhaps that will mean inviting your adult children to join a financial planning meeting, or having a quarterly “meeting” with your family to review your budget or progress towards shared goals. By sharing your financial goals, decisions, and challenges with your loved ones, you can support each other as you work to accumulate wealth while also reassuring each other during times of stress or worry.
One conversation that may be especially helpful to have is about your wishes for after you’re gone. You may not wish to share all the details of your estate plan with everyone, but helping your children and beneficiaries understand what they might inherit could enable them to plan their own finances more effectively. Moreover, it could avoid tension or arguments between your beneficiaries during a time of stress and grief. Talking about your wishes early on gives everyone a chance to ask questions and come to terms with the decisions you’ve made about your wealth.
Your financial planner can help you approach these sensitive topics in a productive and positive manner. That might be through suggesting ways to approach the conversation yourself, or by inviting you to bring your family members to a meeting with them so that they can guide the conversation and answer any questions your family might have about the subject matter.
Speak to your planner today to learn more about the habits that could support your financial wellbeing in 2025.
