Throughout my journey towards financial independence, I’ve made a deliberate effort to stick to good financial habits. Nonetheless, like it happens to everyone, there have been periods in my life when my time was more limited and I simply couldn’t keep up with it all.
As I work with my coaching clients over a four months period, I’ve gotten to see how this is simply a regular challenge that people face around managing their finances. You initially work hard, put the right habits in place and start picking up momentum. Then, suddenly, life throws you a curveball or a change occurs at work, or a new season or school year begins and keeping up with those fantastic habits becomes more of a challenge.
With trial and error, I’ve identified an essential list of financial habits to stick to when your time is limited. These are the behaviors that have the potential to have the greatest impact on your finances and those that I have seen clients have most success with.
The 3 Financial Habits to Stick to When Your Time is Limited:
1. Tracking & Categorizing Spending
When time is limited, tracking and categorizing your spending on a regular basis is high on your priority list.
To track my spending, I personally like combining a free automated tool, such as Mint, with a simple spreadsheet in order to firstly categorize my spending on a weekly basis and then compile the monthly data. The automated tool makes it easy to consolidate my spending according to category of expenses, such as food or entertainment, while my yearly tracking sheet allows me to visually see the fluctuation of my spending from month to month.
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If things are really busy, I may postpone entering my monthly spending in my tracking sheet until I find a bit more time. That being said, I make sure to still categorize my spending in Mint on a weekly basis. It’s a quick task which I complete in about 15 minutes, can be done directly on my cell phone and is much easier when done closer to the time when I made my purchases. It’s very hard to recall in which category a 15$ purchase at a big surface store should be allocated to if that purchase occurred weeks ago.
Furthermore, tracking your spending serves the purpose of giving you some data in order to evaluate the outcome of your efforts. When reviewing your spending, especially when doing so on a regular basis, you get to clearly see if your behaviors resulted in higher or lower spending than ideal. Establishing an average monthly spending per category, as my yearly tracking sheet template allows you to do, will help you identify if you are spending more or less than usual.
If your most recent month’s spending is higher than that average, you know your behaviors ended up costing more than regular within that category. If it is lower than the average, it sounds like you are on target to increase your savings within that category of spending. Just make sure to keep an eye on if you end up compensating by spending more in another category such as eating out more to compensate for a lower grocery spending.
2. Creating shopping lists
This financial habit might seem pretty simple, yet it is surprisingly quite impactful in controlling your spending. It’s the habit of creating a shopping list for anytime you have to go to the store or need to purchase anything online. I consider this as part of the crucial habit of planning in order to reach your goals. In this case, you are planning out what you essentially need or want to purchase in order to avoid overspending.
When reviewing my clients spending and we notice a sudden increase in one or more categories, we’ll work through reflecting on which behaviors recently changed around their purchasing routines. Time and time again, they’ll indicate that life got busy so when they went to the store, they just tried to buy what they needed from memory.
Beyond the fact that their spending increased, one frustrating aspect of it is that when asked if this increase in spending brought them more enjoyment or satisfaction, they’ll often respond that it was not the case.
It’s totally fine to mindfully increase your spending for a more comfortable journey towards your financial goals but I am certain you would want this to result in more satisfaction along the way. When taking the time to create a list before you shop, you can mindfully choose what you will purchase. You also likely avoid food from going to waste as you make sure that you actually need those specific items before buying more.
3. Checking bills and accounts regularly
Checking your bills and accounts regularly is another crucial financial habit to stick to when time is limited. I consider this one to be the most likely to cascade into a series of other financial tasks that serve to keep you heading towards your goals.
The initial habit itself does not require much time. A simple 15 minutes allocated to logging into your various accounts and statements is plenty.
While you do this though, you may end up clearing up other quick financial tasks that can have a big impact. Tasks such as: paying off your statements in full prior to the due date, sending a regular amount towards your investment accounts, actually investing that money by purchasing ETF shares, making sure you maintain a minimum balance in your checking account, verifying your current net worth and many more.
I suggest you keep a list of the bills and accounts you should check and how often to do so (weekly, monthly, on a specific date). This might look like this:
- Checking account (weekly)
- Savings account (weekly)
- Credit Card #1 (when statement comes out on X date)
- Credit Card #2 (when statement comes out on X date)
- Utility bill / account (monthly)
- Self-directed brokerage account (weekly)
Some clients put reminders in their calendars to check specific accounts at a set monthly or weekly date. Others like to pencil out a time directly in their agenda to do this. Just find a simple way for you to come back to this task on a regular basis even when time is limited.
Adapting these to your needs
It’s important to keep in mind that the financial habits that may have the highest return on your investment (pardon the pun) and positive impact on your finances might be different for you then for someone else. You can use this list as a simple guide in order to experiment with what might be ideal for you to keep up with when life gets busier.
Not everyone has the same level of ease with the various tasks it takes to manage one’s personal finances. What may feel simple and effortless to one person, might feel like a lengthy and painful task to another. It takes trial and error to figure out what not only brings the best results to keep your finances on track to reach your goals, but also what feels easier for you to manage when your plate is already full.
Start with focusing only on one or two things, especially if you are dealing with a lot and feeling overwhelmed. Then, when you have a bit more time, return and evaluate what was the outcome of those efforts.
You’ll notice that some of the habits I suggested keeping up with, such as tracking & categorizing your spending, serve precisely the role of giving you data on which to evaluate the outcome of your efforts. This naturally gives them a higher rank in level of priority.
By sticking to these financial habits when your time is limited you’ll continue to make progress towards your financial goals or at least prevent yourself from increasing your spending during that time. You’ll also make sure that you continue to collect data to evaluate how your recent behavior has impacted your finances and to stay on top of crucial financial tasks.
Finally, if you find that you haven’t caught a breather in a while and time to maintain your important financial habits continues to be limited, it might be necessary to reevaluate all that you have on your plate. If you find yourself in this position, I encourage you to honestly look at your schedule to see if there is any way you can free up some time for those important tasks. Involve other members of your household to assist and support you in this.
In order to reach your goals and improve your financial life, your finances need some attention and time. It doesn’t necessarily require several hours per month but consistent good financial habits are crucial to head towards and reach financial independence.
What financial habits do you stick to when time is limited?