Read on for 15 vital financial health habits that everyone should adopt, recommended by the members of Forbes Finance Council.
Members of Forbes Finance Council share healthy financial habits everyone should adopt. PHOTOS COURTESY OF THE INDIVIDUAL MEMBERS.
1. Separate Needs And Wants
You should always remember to differentiate between what you need and what you want. More often than not, people forget to draw a line between the two and therefore spend more than they should. - Ellio Nurieli, Macmoor Capital
2. Live Within Your Means
Our society makes it very easy to use credit to pay for things. It gives us the false sense that we can afford to buy things even though we don’t have the money on hand. Pay for things with money you actually have in your bank account or with cash. Avoid unnecessary credit card debt, auto debt or high-interest loans. Live within your means. - Kevin Dorwin, Bingham, Osborn and Scarborough LLC (B|O|S) Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?
3. Rebalance Your Portfolio
The most overlooked financial health habit is that of portfolio balancing with an eye towards correlated asset classes. Outside of venture capital and private equity, most asset classes today are highly correlated. Financial security cannot be achieved with a collection of investments that could dilute in value at the same time. Educated advisors will expose their clients to alternative assets. - Christian Kameir, Sustany Capital
4. Get All Your Financial Data In One Place
Your decision-making is only as good as the data you analyze. Never take the data you see for granted; question everything and make sure the data is complete. If you are missing 10%, 30% or 60% of your total financial picture, then you have hidden exposure that could wreak havoc on your family legacy and financial well-being. - Craig Pearson, Private Wealth Systems
5. Ask Yourself If You Really Need Something
Living within your means is the most important financial discipline. I help my clients focus on this by reminding them that every dollar they save could be worth a lot more later. When you look at every dollar you spend and ask yourself, “Do I really need this?” then you are thinking long-term. This mindset can lead to complete financial freedom. - Mia Erickson, Whitnell
6. Pay Credit Cards Off In Full
The habit of carrying a credit balance needs to be broken. Payment history and credit utilization are primary metrics in determining a buyer’s credit score. Make on-time payments to avoid any interest stacked onto your account and keep your utilization low by setting boundaries to only purchase what you can pay off at the end of each month. - Jared Weitz, United Capital Source Inc.
7. Opt For Annual Over Monthly Subscriptions
You can get just about anything today for a low monthly rate—so low that you don’t take a second to think if you really need it in your life. Instead of paying monthly, choose to pay for a full year up front. If you can’t bring yourself to make a one-year commitment, maybe it’s not something you need. An added benefit is most companies will give you a significant discount if you pay up front. - Vlad Rusz, Centaur Digital Corp.
8. Obtain Disability Insurance
I have found that too many people overlook disability insurance. This type of coverage is essential for the financial security and health of any business owner. Without disability insurance, you open yourself up to financial ruin if your business still requires you to create an income. Having solid insurance in place is essential. - Sa El, Simply Insurance
9. Meticulously Track Your Monthly Spending
It’s important to keep track of your monthly costs and spending. A great financial health habit is to keep track of where your money is going monthly, from your mortgage payment to your morning coffee or hobbies. Be sure you’re maintaining good financial practices and keeping watch over your interest rates. Don’t pay what you don’t have to and stop yourself from going overboard. - Greg Herlean, Horizon Trust
10. Automate Your Savings
The one habit that truly makes or breaks the success of investing is making sure your savings plan is automated. Out of sight, out of mind! You will never miss that money today and will be grateful when you are sitting on a big pile of money in the future! - Dawn Dahlby-Jurkovich, Relevé Financial Group
11. Assess Your Financial Goals Each Month
Every month, sit down and look at where your money went. It’s so important that you identify the use of every dollar. If you identify your spending every month—12 times a year—you’re making sure that your dollars are flowing where they need to so that you effectively reach your long-term goals. - Justin Goodbread, Heritage Investors
12. Check Your Credit Score
For consumers and small-business owners, a credit score is like a passport to the American financial system. Individuals with low credit scores or thin credit files often face reduced access to affordable financial products. Consumers and entrepreneurs can explore nonprofits that can help them safely build their credit score, and everyone should conduct a free annual review of their credit report. - Luz Urrutia, Opportunity Fund
13. Create An Emergency Cash Fund
The most overlooked habit I see is holding enough cash in an emergency account. People tend to focus primarily on their retirement account at work or think they should always be fully invested. The commitment to having emergency cash on hand should always be there. - Meredith Moore, Artisan Financial Strategies LLC
14. Plan Your Expenses And Tailor Your Income Streams
It is a boring habit, but in my opinion, planning your expenses and tailoring your income streams and tax planning is the main habit all investors should adopt. A lot of people do not want to do that and do not know how much money they need to be making, their investment goal or what investment horizon they have. - Azamat Sultanov, Fortu Wealth
15. Pay Yourself First
Set up an automatic deposit with your 401(k) and create an automatic process for any outside investing. If you do nothing, it still happens. If you have to manually move money, the chances go up that it won’t happen. You can learn to live on what’s left—you’ll never miss it. If it doesn’t happen automatically, you’ll look up at age 55 and realize you missed your opportunity. - Bill Keen, Keen Wealth Advisors