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7 Ways to Develop Better Money Habits

Have you noticed that whenever you do things haphazardly, it usually doesn’t turn out well? That’s why creating better money habits is so important to building the life you want. 

Habits possess the power to transform your life, so applying good habits can improve your financial outlook. Below are some of the top tips for how to develop better money habits!

This post has been written by Kate Underwood, our very talented staff writer!

Start Small

Oftentimes, we try to make too big of a change, or too many changes, all at once. This causes us to get frustrated and give up quickly. 

James Clear’s book Atomic Habits is based on the idea that small, incremental changes that you build into your routines can lead to big improvements over time. For example, doing 1% better every day for a year results in a 3,778% improvement! 

Pick an area of your finances where you could do 1% better today. That’s such a small amount, there’s no excuse not to try it!

better money habitsSmall Habit Ideas:

  • Pay an extra $10 a month on your student loans
  • Cut back on dining out from 4x/month to 2x/month
  • Contribute 1% more to your retirement account 

Getting used to a tiny habit is the first step. Then, improve by another 1% every month or every few months. Gradually, you’ll see big gains!

Monitor Your Finances

If you’re not already in the habit of keeping track of your finances, find a great tool to do so right away. Gretchen Rubin, in her book Better Than Before, explains that we “manage what we monitor.” 

It’s pretty hard to change bad spending habits if you don’t even realize what they are. So get to work on a budget or spending plan. Here’s more about budgeting apps to assist you in this step.

Use your records to help you determine which better money habits you can create. Maybe you notice on your bank statement that you spent way more on restaurant meals than you expected. That tells you where to make changes in the future. 

Make Good Habits Easy

A cardinal rule of habit formation is to make it easy to follow good habits, and hard to follow bad habits. Don’t rely on willpower, because all of us experience moments of weakness. 

Let’s say you’re paying off credit card debt and you want to make sure you won’t go further into debt during that time.

Here are some strategies people use to avoid using credit cards:

  • Cut them up and throw them away!
  • Freeze your credit cards (literally, in a block of ice)
  • Delete saved card information from online payment portals 

Check this post for more easy ways to avoid bad spending habits!

Find Accountability

Some people succeed best with someone else holding them accountable for their actions. 

If you have a spouse, they should play some role in this. Both of you being on board with better money habits will make you more likely to stick with them. My husband and I keep each other accountable — when one of us wants to order take-out, the other usually will step in to remind us of our frugal goals!

You can also find a friend with similar financial goals, or someone you can trust to help you follow through on your improved habits. 

Accountability Tips:

  • Have a brown-bag lunch partner at work
  • Hold spending review meetings with your spouse weekly or monthly
  • On a trip, ask a friend to hold your wallet

investments that save me moneyAutomate Your Finances

It’s essential to automate as much of your financial life as possible. The less you have to think about what to do with your money, the more likely you are to make good choices. Good habits should be automatic, not something you debate. 

Related: How to Become an Automatic Millionaire

Saving and investing are easy to automate. You can “set it and forget it”. This is a way of making decisions ahead of time for your money, to avoid decision fatigue and poor choices in the moment. 

You can set up automatic reminders of financial tasks that need to be done on a semi-regular basis. Todoist, Google Calendar, and other tools can automatically notify you of important deadlines. 

Examples of reminders to set up:

  • Check your credit report
  • Renew or cancel memberships
  • Increase retirement contributions by another 1%, 5%, or more
  • Update your will and estate planning documents 

Related: I Died Yesterday, A Message to My Family

Focus on Actions, Not Outcomes

A lot of people get confused when setting goals or trying to build better money habits. They tell themselves things like, “I’m going to earn 6 figures next year,” even though that’s not entirely within your control. 

Be sure to focus on the actions you want to do habitually, rather than outcomes.

Here are some specific habits to try:

  • Wait 72 hours before making any unplanned purchases. 
  • Use cash when shopping at ___ (particular retailer). 
  • Stick to my list when buying groceries to avoid impulse buys. 
  • Bring my lunch to work. 
  • Always try to buy used before buying new. 
  • Deposit 10% of every paycheck into a retirement account.

shop for a checking accountPlan For Slip-Ups

You may be thinking, why would I want to plan to fail? Isn’t that just making it more likely that I’ll mess up? But no, you need to plan ahead for what you’ll do if and when you slip up in a new financial habit. 

Maybe you’re totally perfect, but most people I know are…well, human. We mess up.

A key step in creating better money habits is to have a plan for the times when you don’t follow through. If you’re kicking a retail therapy habit, but after a really rough day at work, you find yourself clicking “buy now” on something you don’t need, don’t panic. 

Expect and accept that you’ll miss the mark once in a while. The important thing is to regroup and return to the good habit as quickly as possible. 

Don’t let one mistake cause you to justify an entire week-long spending binge or give up completely.

Your Habits Determine Your Life

Habits are so important to our financial well-being, so it’s worth making the effort to build better money habits that will benefit us the rest of our lives.

What new money habits are you going to adopt?

Grow Rich Money


My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. “Wait 72 hours before making any unplanned purchases.”
    YES! You are so right. Almost ALWAYS, if I wait and think over the things I want, I find that I don’t want them anymore a few days later. I also like your tip about deleting saved credit card information. This is the easiest way for people to waste money quickly. It’s just too easy to click “buy now!”
    Awesome article!

    • Glad you liked it, Lindsey! Thanks for the comment!

      • Another good tip is try paying your bills by check for a month or two. You would be surprised how it opens your eyes on your spending. Nice work with the article Derek.

        • Oooo, good one Beau. It definitely matters when you physically write out that check and send it through the mail. It makes it so much more real!

          Thanks for the tip!

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