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50 money habits everyone should have

How many of these do you adhere to in your own personal finances?

By MSN Money Partner Jul 22, 2011 9:41AM

This post comes from Len Penzo at partner blog Len Penzo dot Com.


I have a lot of bad habits. For example, I tend to bite my nails when I get stressed out. I also have a penchant for opening the cupboard to get a drinking glass -- then walking away and leaving the door wide open. I know. I can't explain it either, but it drives the Honeybee absolutely bonkers every time I do it.


Even so, I like to remind her that I have a lot of good habits too. Perhaps not coincidentally, many of them are related to personal finance.


Hopefully, you have a lot of good personal-finance habits too. How many of these apply to you?

  • Taking advantage of your employer's flexible spending account. These accounts not only reduce your tax liability, but they also act as a de facto quasi-savings plan.
  • Tracking your income and expenses.
  • Being careful not to overspend on gifts.
  • Paying attention to mortgage interest rates -- even after you buy a home. People who fail to do this may miss out on refinance opportunities that could save them tens of thousands of dollars over the life of their loan.
  • Never buying anything on impulse. One of the best ways to prevent this is to make a shopping list and then stick to it.
  • Opening your bills when you get them.
  • Paying your bills online when possible.
  • Doing your research before purchasing extended warranties.
  • Ignoring credit card convenience checks that come in the mail. They usually come with high fees that make them extremely expensive.
  • Saving part of your income for retirement. Try saving at least 10% from every paycheck; it's never too late to start.
  • Keeping the money in your wallet to a minimum.
  • Spending less than you earn every month. File this one under "D" for "Duh!"
  • Having an exit strategy when investing. Without one, it is tough to recognize the right time to cut your losses -- or take profits off the table.
  • Never assuming past performance guarantees future results.
  • Taking advantage of automatic paycheck deductions. Not only does it ensure you pay yourself first, it's an easy and painless way to save for retirement.
  • Reading all contracts before signing on the dotted line.
  • Planning your dinner menus in advance. We do this at my house because it's an extremely effective way to reduce our monthly food expenses.
  • Reviewing your credit card statements for errors and erroneous charges.
  • Keeping a budget. Because for most folks, when it comes to managing their money, failing to plan is the same as planning to fail.
  • Faithfully following your budget. It's one thing to create a budget, but if you don't have the discipline to put it into action, why bother?
  • Increasing your 401k contributions every time you get a raise. (How much money will your 401k provide?)
  • Properly maintaining your car. By following your car's maintenance schedule and paying a little up front, you'll reduce the risk of encountering more costly major issues down the road.
  • Paying the bills on time. By doing so you'll avoid spending money on needless late fees.
  • Taking advantage of coupons and Internet promotional codes as often as possible.
  • Refusing to pay the minimum on your credit card bills each month. Here's a credit card fact: Making minimum payments each month will ensure you pay the maximum interest.
  • Using your credit card to buy things only if you can pay it off in full at the end of each month.
  • Leveraging "good debt" to purchase things that have the possibility of increasing in value or providing a path to a higher income in the future.
  • Never hoping for an inheritance to solve your money problems.
  • Avoiding the use of payday loans to cover temporary financial shortfalls. Eliminate monthly shortfalls by following a budget and maintaining an emergency fund.
  • Not relying on Social Security as your primary source of retirement income.
  • Avoiding the lottery. There is a reason why the lottery is known as the "stupid tax."
  • Setting, and then regularly reviewing and updating your savings goals.
  • Never overpaying for insurance. For example, why pay the higher auto insurance premiums for low deductibles if you rarely make claims?
  • Resiting the urge to float checks right before payday. Today, faster bank processing makes this practice much more risky than it used to be.
  • Fully understanding stocks and other financial instruments before investing in them.
  • Avoiding cigarettes. This expensive habit is one of the "four horsemen of personal finance."
  • Avoiding wasted time clipping coupons you'll never use.
  • Ignoring the temptation to keep up with the Joneses.
  • Buying a new car -- or better yet, a newer used car -- and keeping it for at least 10 years. Buying new cars is costly because they can lose upward of half their value by the time they are three years old.
  • Remembering to comparison shop whenever possible.
  • Regularly checking your credit report for errors, signs of fraud and identity theft. You're entitled to a free credit report from Experian, TransUnion, and Equifax every 12 months. That means with proper planning you can actually get an update every four months.
  • Optimizing your 401k account every year. Diversifying and balancing your allocations will minimize your losses in the event of a major market downturn.
  • Negotiating whenever the opportunity presents itself.
  • Ensuring your retirement needs are taken care of prior to providing for your children's future. What good is saving for the kids' college education if you'll be eating cat food in your golden years?
  • Avoiding frugality as a primary means to achieve prosperity. You can only free up so much money by cutting expenses.
  • Occasionally rewarding yourself by splurging.
  • Maintaining an emergency fund. Everyone should have between three and six months of living expenses in the bank.
  • Resisting the urge to tap your emergency fund for nonemergencies.
  • Avoiding interest payments whenever possible.
  • Treating your household like a business. By taking an active role in managing your finances -- and looking at ways to maximize your income -- you'll ensure a brighter financial future for you and your family. Who knows: Maybe you'll even stop biting your nails.

More on Len Penzo dot Com and MSN Money:

Aug 1, 2011 4:29PM

Something new, something old - each tip is worth something to someone I'm sure.  My one caveat is that if you're unemployed or living paycheck to paycheck 10% of a person's income is huge and it's needed to have a roof over one's head or food in your child's stomach or gas in the tank to get to and from work.  Switching jobs in this economy isn't a viable option.  We live without cable, without internet and run the air only in the evenings when the rate is lowest.  And we're still barely making it on a single income.  Saving anything is out of the question for us if we want to keep the lights on and our kids fed.  Never take anything as a given or a guarantee in life - that would be my financial advice.

Aug 1, 2011 4:00PM

Hey, Washington did not take this advise.  Why should we?  I say do as the Government leadership does, get into as much debt as possible then file BK.

Aug 1, 2011 3:03PM
Buying a new car -- or better yet, a newer used car -- and keeping it for at least 10 years. Buying new cards is costly because they can lose upward of half their value by the time they are three years old.

I hate this piece of advice. If your plan is to keep a car for 10yrs then why care about how much you lose in value in 3yrs? Yes, you should always check the depreciation rate of the car you buy. But as long as you can trade it in for a decent down payment towards your next car then it shouldn't matter if you bought it new or new/used. 
Aug 1, 2011 2:15PM

Same old advice that you read over & over but thought I would elaborate on this:

Paying attention to mortgage interest rates (to know when to refinance) - once you refinance, and if for some reason you have to file bankruptcy, your house can be taken with your assets.  If you've never refinanced, it cant.  I'm not saying dont refinance, just something to keep in mind.


Also, nobody can argue that it is better to have no debt.  I understand the need to take on debt at times, but keeping it "because its good debt" isnt going to help your finances.

Aug 1, 2011 2:14PM
Hey Scott, what about the 10K I borrowed from the Gambino Family to play the ponies?  Is that good debt?
Aug 1, 2011 1:53PM
Yo Tiger - Theres a lot of good debt-  Car loan - a car to get you to your job that pays.  Mortgage - a home to live in and hopefully sell more than what you paid.  Hospital/dental loan- you can't work of you're sick or injured or dead - Student loans - an investment in your career and income.  90 day same as cash loan - pay no interest and get it faster.  Etc.
Bad debt - CC debt, payday loans, high interest loans, cash advances, rent a centers
Aug 1, 2011 1:37PM



There certainly IS good debt.  Student loans that cost me $20,000 but allowed me to increase my earning potentional buy $20-$40K EACH YEAR since I graduated at 27 years old.  That is good debt because without that degree I would not be able to have the job I have now.


Anything you borrow money for that allows to you get more money in exchange is good debt.

Aug 1, 2011 1:28PM

Great artlcle for those who find themselves wondering why they work but never have any money.  I forwarded this to all of my brothers and sisters for some tips.  Happy to say that I do 45 of these habits. Need to work on the car maintainence one a bit better. 


Paying on line is important for a couple of reasons, you can schedule the payments for the day they are due and then you never "forget" to mail the check.  Also, you do not have to worry about checks delayed or lost in the mail. 


But the last one is the best...treat your household like a business and make sure you stay in the black.

Aug 1, 2011 12:53PM

" Opening your bills when you get them "


Geez, what great advice!  I've been putting my bills in the freezer for the longest time.

Aug 1, 2011 12:09PM

I've got several  great ways to improve your finances, check the out.


 First, don't act like the FEDERAL GOVERNMENT does and live way above your means!!! Having more month at the end of the money is whats killing us as individuals and a NATION AS WELL. IF OUR NATONAL "DEBT CLOCK" DOESN'T SCARE YOU,,,,,,IT SHOULD!!!!




Next, elect people who would rather you KEEP YOUR MONEY THAN TAKE IT FROM YOU  AND GIVE IT TO SOMEONE WHO DOESN'T DESERVE IT. Again, difficult to do when the mind set in this country seems to be that the federal government's job is to take care of us all from birth to death. In case your wondering, that ISN'T THE JOB OF THE FEDERAL GOVERNMENT. Get the government out of your wallet and you'll have more money!! WHAT A NOVEL IDEA!!!!


Now, STOP trying to keep up with the folks next door. Sure, they've got  a beautiful new CARDBOARD BOX they got from the home depot, that they now call HOME because the home they once had is owned by the bank that MR. OBAMA BAILED OUT WITH OUR MONEY , but that doesn't mean you have to as well!! Remember, George and Weezy aren't going to be in the Whitehouse for much longer so keep that in mind.


And finally, figure out some way to become a "minority" or a "refugee". If you can do that, you'll be all set, no money worries at all.


So thats it!!!

Aug 1, 2011 11:01AM
Never heard of the lottery as "stupid tax". A lot on this list is under "duh category, like pay bills on time. Better to use the bank on line alerts that pop up when usual bills are usually due. Also if social security will not be you main old age income - you probably don't need this list - you're already rich enuff with no pensions anymore, troubled 401k's and been taking out of your IRA to, uh, survive.
Aug 1, 2011 10:56AM
There's no such thing as "good debt".
Maybe we should all e-mail this to our government leaders? It is very basic maybe just maybe a few of them would be able to understand this is the way the U.S. Budget needs to be run.
Aug 1, 2011 9:10AM
There are a couple of reasons to pay online.  The most obvious is saving the 43 cents on postage if you mail your bills.  Also, when you pay online, you can get an email confirmation, invaluable if (when) the company says you didn't pay, and hits you with a late fee.  If you mailed a check, or paid in person, you would have to produce a copy of your cleared check or reciept, if you can find them.  Also paying online means your payment is credited instantly, or at least overnight, which saves you daily interest that accumulates as a check goes through the postal system.  Lastly, you can set up most payments to automatically pull each month, which reduces the changes you miss a payment due date, the bill gets lost in the mail, or you happen to be out of town when the bill comes due.
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