An individual need not hold a financial management degree to manage personal finances effectively, rather, it requires discipline, good habits, and consistency. According to Scott Tominaga, individuals who manage their money proficiently have a disciplined system based on which they can plan for the future, live without debt, and achieve their financial goals. Here are five habits that distinguish financially successful people from others.
1. Living Below Their Means
One of the foundational habits of financially successful people is that they spend less than what they earn. Instead of increasing their costs with every pay raise or bonus, they maintain a relatively low standard of living and focus on saving money. This disciplined behaviour allows people to stay prepared for rainy days, invest in different plans, and helps eliminate the stress of living paycheck to paycheck.
Living on less than one’s means isn’t deprivation; it’s a matter of making conscious decisions. For instance, they might opt for a good used car rather than a high-end model or eat at home more frequently than eating out. These choices compound over time into substantial savings, ensuring financial security.
2. Automating Savings and Investments
Instead of just relying on willpower, people who manage their money well set up systems to avoid temptation. The way they achieve this is by automating their savings and investments. Once they get paid, a chunk of that money goes straight into savings accounts, retirement funds, or other investments.
According to Scott Tominaga, this consistent habit helps them stick to their financial goals, no matter how tempting it is to spend. Plus, automating these processes reduces the chance of making mistakes or forgetting, which can really mess up even the best financial plans.
3. Tracking Spending Regularly and Dutifully
Keeping expenses in check is another important habit. Individuals who are good at managing money, prefer employing resources such as budgeting apps, spreadsheets, or simply pen and paper to track each dollar spent. This habit gives them a transparent view of how their money is spent and helps them recognize areas to bring changes.
Daily tracking also promotes sounder decision-making. As soon as expenses start creeping upward or diverging from budget allocations, these people can make speedy corrections. This alertness ensures they remain in charge and do not carry unnecessary debt.
Regular tracking also supports better decision-making. When expenses begin to creep up or deviate from the budget, these individuals can quickly adjust. This vigilance helps them stay in control and avoid unnecessary debt.
4. Setting Clear Financial Goals
Clear, measurable financial goals help disciplined spenders stay motivated. Whether it’s building an emergency fund, saving for a down payment on a house, or planning for early retirement, financially disciplined people set realistic goals with time frames.
Setting goals works as a direction and helps them prioritize their spending habit. Despite making spontaneous purchases, they assess if this expense aligns with their bigger financial goals. This long-term perspective is a core component of financial discipline.
5. Avoiding High-Interest Debt
Self-controlled individuals in managing money are wary of incurring debt, particularly that attracts high-interest, such as credit cards or payday loans. If they need to borrow money, they compare prices to get the best deal.
They also use credit cards strategically to earn rewards, build credit history, or bridge temporary cash flow shortfalls—never to finance a lifestyle they can’t afford. Staying away from toxic debt maintains their financial well-being and opens up more space for saving and investing.
In conclusion, the aim of individuals who handle their finances expertly is not to be rich, but to have financial security for their lives. Just by embracing these habits, any individual can become money-smart and achieve their life goals.
