10 tiny behavioural changes that could revive your finances for the future

If we asked you what your worst financial habit is, what would you say?

Some might cite overspending, while others could say they’re too cautious with their money. Whatever your Achilles’ heel, we all have one – and there is no shame in wanting to improve your financial behaviours, whatever your age.

Often, though, we fail to change our behaviours because, simply put, we aim too high. Expecting an overnight tectonic shift in your financial habits can lead to inevitable disappointment, and might ultimately keep you stuck in your ways.

Fortunately, small shifts in your thinking and behaviour can have a hugely positive long-term impact on your money. If you need some inspiration, here are 10 tiny behavioural changes that could revive your finances for the future.

1. Treat all pounds as equals

How many times have you received a refund or bonus and treated it as “free money”?

While it is often tempting to consider unexpected windfalls as non-value cash, and spend it without a second thought, it could be helpful to treat all pounds as equals.

All income is income, regardless of how it arrives – so remember to think carefully about how you use it, even if it’s “extra” income you didn’t know was on its way.

2. Avoid making financial decisions at emotional times

Research published by FTAdviser found that 1 in 4 savers are “taking more risks” with their money during the cost of living crisis.

This is just one example of how, when life becomes stressful, it can be tempting to spend rashly, or make otherwise risky financial choices without thinking them through.

If you’re prone to emotional spending – or over-tightening the purse strings when you’re stressed – learning to recognise this tendency, and thinking before you act, could stabilise your finances long-term.

3. Aim for progress, not perfection

According to Very Well Mind, one of the main reasons psychologists believe people break new year resolutions, and other similar goals, is “thinking too big”.

Simply put, if you aim for perfection with your financial behaviours, it is likely you will wind up disappointed – perhaps leading you to think: “what’s the point?”

Instead, try aiming for progress instead of perfection. If you overspent on your monthly budget by £200 last month, overspending by £100 next month is not a failure, it’s an improvement.

Seeing your progress as a positive, rather than focusing on how imperfect it is, could help you reframe your financial goals.

4. Round up your purchases

Thanks to many innovative financial apps, you can now round up purchases and reroute your change straight into a savings pot.

For example, if you spent £4.50 at the shops, you’d be charged £5, with the remaining 50p going straight into your savings.

You may not notice the difference in your budget, but over time, these tiny contributions could significantly boost your savings. Saving 50p a day equates to £182.50 a year – money that could be spent on a car’s MOT, a luxury family meal out, or even a night away in a hotel.

5. Cut through the noise

With news and media streamed constantly through social media, TV and radio, it can be hard not to panic when hearing about difficult times the economy is facing.

But, as you read earlier, lying awake at night worrying about your finances may only fuel risky financial behaviours.

So, cutting through the noise and focusing on a few trusted sources of information can help. When you work with a Financial Planner, for instance, you know there’s an expert on the end of the phone who can talk through your worries and help come up with a solution.

6. Set up a Stocks and Shares ISA

Building an investment portfolio can be one of the most beneficial ways to grow your wealth long-term. Sadly, according to Yahoo News, 42% of people say they don’t invest because they “don’t have enough money”.

If you can relate to this feeling, setting up a Stocks and Shares ISA can help combat those fears and enable you to build an investment portfolio on your own terms.

Most Stocks and Shares ISAs enable you to open the account with only a small deposit, and you can set up a monthly contribution of approximately £25.

This “small” monthly payment makes up an impressive £300 a year, and could help you begin or continue your investment journey without feeling overwhelmed by the process.

7. Attach dreams and goals to your financial targets

Setting arbitrary financial goals can feel empowering in the moment, but over time, it may be difficult to follow through with these plans.

If you struggle with motivation, attaching dreams and goals to your financial targets may inspire you to prioritise reaching them.

For instance, if you set a goal to save up £10,000 without any specific reason, it would be easy to put this target on the back burner.

Alternatively, assigning this £10,000 to helping a child buy their first home, paying for a home renovation, or going on a dream holiday may encourage you to keep saving on a schedule that suits you.

8. Reduce luxuries by just 10%

The cost of living crisis has made life challenging for many families, and if you are feeling the pinch, it could be tempting to immediately remove any “non-essential” expenditure from your life.

Although it may mean you spend less in the short term, getting rid of all your luxuries may be unsustainable, and could lead to poor mental health too.

If you love eating meals out, having cosmetic treatments that boost your confidence, or going abroad, cutting down on these by just 10% – instead of scrapping them altogether – could help you stick to your budget while maintaining the things you love.

9. Think long-term

All the above tips have one thing in common: your long-term financial wellbeing.

It can be easy to get caught up in the moment, but in reality, these tiny behavioural changes are all designed to benefit you long-term.

By adopting a long-term approach to all your financial choices, you could be better financially prepared to take on retirement, help the next generation, or fund bucket list adventures in the years to come.

10. Work with a Financial Planner

There’s nothing like having a trusted confidant you can always rely on. When it comes to money matters, your Financial Planner can be just that.

Establishing a relationship with a Financial Planner might seem like a small step, but it could be the nudge you need to entirely revive your finances for the future.

We can help build a robust, comprehensive, realistic financial plan that suits your family and your lifestyle.

Get in touch

Is it time to change your financial behaviours? There’s no time like the present. Email us at enquiries@pen-life.co.uk, or call 1904 661140.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.