Your Money Habits = Your Financial Health

Hi Reader,

Welcome to The Money Series and if you are new here, thank you for signing up. Personal Finance can feel ambiguous and overwhelming, but I am here to help simplify the journey.

As James Clear wisely notes, "Good habits make time your ally; bad habits make time your enemy." Your habits shape your life, and when it comes to money, these habits can either set you up for financial freedom or keep you stuck in a vicious cycle. Today, I’m diving into some financial habits that might be holding you back and how you can adjust them.

Avoiding Your Finances - The Ostrich Effect

This you?

The ostrich effect is a financial bias that got its name from the false belief that ostriches hide their heads in the sand to ignore danger or pretend it does not exist, to protect themselves. Much like the myth about ostriches burying their heads in the sand, some people avoid dealing with their finances. Whether it’s ignoring debt owed or waiting for the perfect time to start investing, inaction can be expensive. If you have debt, you should create a repayment plan and know exactly when you will pay off the debt. Knowing the exact date you'll be debt-free can be highly motivating. As for investing, the earlier you start, the better your outcome, as I’ve always mentioned. Don’t wait for the “perfect” time to begin—it doesn’t exist.

Not focusing on the Big Ticket Items

Many of us obsess over the small things—like cutting back on a daily coffee—without paying attention to the big-ticket items that truly shape our financial lives. While small expenses add up, major decisions like renting or buying a home, purchasing a car, or planning a wedding deserve careful thought and strategy. Give these decisions the attention they need, as they have a significant impact on your long-term financial health.

Trying to Control Every Financial Detail

If you find yourself constantly checking your bank balance, scrutinizing every purchase, or feeling anxious about each transaction, you might be too focused on the minutiae. Being in control of your finances doesn’t mean micromanaging every penny. Instead, automate your finances. Set your savings and investments to transfer automatically after every paycheck. Know your four key numbers, create a budget, and let automation do the heavy lifting. This way, you free up mental energy to enjoy life without obsessing over every transaction.

Not Challenging Your Money Beliefs

Many of our financial behaviors are shaped by what we saw and heard growing up. If your family never discussed money, you might struggle to set clear financial plans. Alternatively, growing up in a money-scarce household might lead to feelings of guilt when you spend or cause you to overspend without a plan. It’s time to reflect. Ask yourself: Why do I believe what I believe about money? Where did these beliefs come from? Do they serve me now? Take time to write down and examine your money beliefs and then interrogate those beliefs. Decide which ones are helping you and which are holding you back.

Spending without a Plan

Some people are on the other side of the spectrum—spending impulsively without a plan. If this is you, it’s time to set a purpose for your money. Mindless spending leads to overspending on things you neither need nor want, leaving little room for things that truly matter. As I previously noted, consider setting a waiting period before major purchases, establishing a spending limit, or trying a “no-buy” challenge. Being intentional with your spending gives you more freedom to take risks and make financial moves that benefit your future.

From avoiding money entirely to becoming fixated on it, unhealthy money habits can hold you back from reaching your financial goals. As much as we strive to adopt good habits, it’s equally important to purge ourselves of the ones that hold us back. As James Clear puts it in the book Atomic Habits - “You have the power to change your habits, and your habits have the power to change you.”

Feel free to send in your questions.

Reflect on This:

• Are there money habits you’ve inherited from your parents, mentors, or culture that are influencing your financial life?

Till next week, I am rooting for you, money-ly!

Dee

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Disclaimer: This does not constitute financial advice. Please conduct your research or consult your financial advisor for important financial advice.