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8 habits of financially successful people


Do you manage your money, or does your money manage your life?

“Everybody should always budget paying themselves just like they were a utility bill, a water bill. Paying your savings account should be just one of those expenses.” Ellie Kay, author of Lean Body Fat Wallet

Think about that for a moment. Are you aware of how each dollar is being spent before you spend it? Do you have a budget that includes a solid savings plan? Or are you constantly scrambling to pay bills and juggling debt, hoping that one bill doesn’t clear before the next deposit comes in? Financially successful people are masters of their money domain. Here are their habits.

Leverage your tax deductions

Do you claim zero dependents on your 1040 so that you can be assured of  anice, fat tax refund check? If so, stop that. You’re letting the government use your money when you could be putting it to better use working for you, says personal finance expert Ellie Kay, author of Lean Body Fat Wallet.

“The problem is that when we get that money back in one lump sum, the tendency is to spend it,” says Kay. Instead, if you manage your deductions properly you could add hundreds of dollars to your monthly take-home pay. You could then use that money to pay down debt or build savings.

“If you’re paying 12 percent interest on consumer debt, you could get ahead of that by using that extra money to pay that down,” says Kay. After all, the government isn’t paying you interest on the money you’re essentially loaning to them. So increase your take-home pay and use it to get ahead now.

Read the fine print

Do you know how much your bank charges in overdraft fees? Are you aware of what minimum balance you need to maintain to avoid checking account fees? Are you versed on how your credit card’s rewards program works? Do you know how long you have to wait between depositing a check and being able to access the funds? Financially successful people know these things, says Matt Chevalier, senior vice president of retail strategy for TD Bank.

“Successful people are curious about how things work,” says Chevalier. “If you know the features that come with your banking account you can take advantage of a lot of them.”

Create a manageable budget

Budgets often fail because they are too restrictive. It’s like going on a diet, says Kay. If you try to lose 10 pounds in a month, you have a greater chance of putting that weight back on or failing altogether. But if you lose slowly over time, you’re more likely to succeed.

Don’t go cold turkey on the fun stuff. You can dine out, but cut down from once a week to once a month. Don’t try to pay off all your debt in three months. It’s better to have a three-year plan that you can stick to than a more aggressive one that you might not be able to stick with.

Write down how much you earn in a month and subtract out all of your regular expenses: housing, utilities and car payments. Then figure out what you’ll do with the rest. How much will you spend on groceries? Gifts? Charitable giving? And the fun stuff? Write it down, check your progress regularly and stay on track.

Pay yourself first

When you create that budget, include a line item for savings. Then, once you get paid, instantly transfer that amount into your savings account. Don’t give it time to sit there, tempting you. Out of sight is out of wallet.

An easy way to do this is to set up an automatic transfer between accounts, says Chevalier. “Everybody should always budget paying themselves just like they were a utility bill, a water bill,” he says. “Paying your savings account should be just one of those expenses.”

Maintain constant contact with your money

If you know what your bank account balance is on a daily basis, you’re much less likely to overspend. Online tools make this easier than ever, says Chevalier. Many banks allow you to request text alerts if your account balance falls below a certain amount. Mobile apps allow you to check your balance in real time.

Talk about your finances

If you’re married, a budget is only as strong as its weakest link. And if you don’t discuss the budget—how it works and how much each of you can spend—you’re doomed to fail.

“Talk about the budget and set boundaries for the conversation,” says Kay. “For instance, you will not call your spouse an idiot. There will be mutual respect.”

Make credit work for you

Consumers can win the credit card game by paying off their balance in full each month and by taking advantage of reward programs. Credit cards are also a great way to build a good credit history, Chevalier says, which could help you earn a lower interest rate when you need to shop for a home or car loan.

Practice delayed gratification

Temptation is everywhere. There’s the 40-percent-off coupon that arrived in your email inbox. There are the shoes in the shop window that caught your eye when you know for a fact you don’t need any more footwear.

“Practice the three D’s: determine, distract and delay,” says Kay. “Remain determined that you will stick to your budget. Distract yourself from the purchase. And then delay it. Tell yourself you’ll come back in a day and see if you still really want that item. Often you can get past the impulse if you can delay the purchase.”

So make a plan, control your spending and pay yourself first. And before you know it, when it comes to living the life you want, you’ll be calling the shots, not your money.


Cynthia Ramnarace is an independent journalist based in Rockaway Beach, N.Y. She specializes in personal finance, health and older adult issues. Find out more at