Money Habits Glossary
Updated: Apr 27, 2022
A money habit is a learned pattern of behavior concerning your finances, related to spending, saving, earning, paying, etc. Like any other habit, a money habit is usually followed without intentional thought. For example, a money habit is to eat out every day or to put 10% in your savings account.
Good money habits:
Good money habits are patterns of financial behavior that help you save money and ensure your financial stability. These habits protect you from stress, help you make the most of your finances, and prepare you for the future. People can acquire good money habits over time, practice, and commitment.
Bad money habits:
Bad money habits are patterns of financial behavior that are not responsible and can threaten your financial stability. These habits lead you deeper into debt or prevent you from making financial progress.
The debt-free journey is about overcoming one's debt and becoming financially secure by eliminating debt from one's life. It is a journey with its obstacles, ups and downs, and goalposts that strive to take you to the end goal: paying off all your loans, credits, and other obligations.
Savings support group:
A savings support group is a real-life or online circle of like-minded people on their debt-free journey who finished it or thinking about embarking on the financial growth journey. These people understand the struggle and are willing to support you on your journey.
A budget is the cornerstone of good money habits. It involves planning your expenses and keeping track of all the money and how it gets spent. An annual, monthly, weekly, or even daily budget is essential for starting your journey, as it helps you become more mindful of your funds and expenses.
An impulse purchase is a purchase you make without thinking. Usually, it is a sign of bad money habits. Impulse purchases affect your budget and limit your savings, often without showing any benefit in return.
Old fashion, cold cash is the preferred payment method of many people trying to save up. Cash allows you to keep track of your finances, limits your impulse purchases, allows you to take control of what you buy, and, importantly, prevents you from spending money you don't have.
This is the end goal of the debt-free journey. It means that you will not be indebted for loans, credits, or large purchases and instead will be able to use your money in clever ways to improve your finances. Instead of being like the many people who owe thousands for their credit cards, cars, or homes, you will be free to use all your money as you see fit.
A concept you will need to get acquainted with to kickstart your journey. You will need to look for ways to reduce your spending and live a debt-free life. It involves good money habits, the support of the community, cutting down on unnecessary expenditures, and a lot of financial planning.
Meal planning is associated with good money habits. It is a step towards saving, and it involves planning and preparing meals in advance to avoid eating out or spending too much on groceries. Meal planning can involve deciding a menu for the week and buying the needed products.
A debt-free mindset is a set of beliefs to help you get to zero debt. At its core, there are beliefs like "A zero-debt life is possible" and "I can achieve this." It also involves an aggressive, proactive attitude towards money that throws everything into cutting down on existing debts, finding ways to increase one's income, and reducing one's spending.