Five financial habits we wish we’d inherited
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Parents and guardians can pass their attitudes towards money onto their kids. And while it may not be all down to genes, here are five healthy financial habits we wish we’d inherited.
1. Budgeting like a pro
OK, it might seem a bit cliché, and we’ve talked about it before. But budgeting can be a really healthy habit.
Making a budget usually involves looking at your monthly income, checking how much money you need to cover your essentials each month, and then deciding how much you can afford to put towards your goals. Your goals could be anything from “go out for dinner three times a month” to “go on a big road trip” to “buy a house”.
A budget can let you spot areas of overspending and help make sure you’re leaving yourself enough money for those important bills. And since budgeting gets you thinking about what you want to achieve financially, it can help ensure your goals don’t fall by the wayside.
2. Saving regularly
Setting a little bit of money aside on a regular basis can help you work towards your financial goals. And here’s some good news: there are ways you can ‘automate’ your savings – that is, move money from a current account to a savings account automatically. So even if you don’t feel like it comes naturally to you, saving can become a habit without you needing to think too much about it.
There are different apps and tools you can use to automate your savings, so it could be worth having a look to see what’s out there. Your own bank might offer a way to automate your savings.
Some apps and tools will decide how much you can afford to save and put that extra money in a savings account. Others will round up your transactions to the nearest pound and set that extra aside for you.
Or you could just set up a standing order to transfer money from your current account to a savings account.
And remember, savings accounts (for example, with a bank or building society) will typically pay interest on your savings.
3. Keeping an eye on debt
Sometimes people rely heavily on credit cards and end up having trouble affording what they’ve borrowed. When you don’t clear the balance on your credit card, interest is added to the sum you owe – potentially making it trickier for you to pay back. So keeping an eye on how much credit you’re using and trying to make sure you can afford your debts is a healthy habit to have.
It’s worth making sure you have money set aside for emergencies, like home or car repairs. This could mean you’re less likely to need to depend on credit when unexpected costs crop up.
Remember, paying your credit card bills on time can also help you improve your credit score. So can things like making sure you’re registered to vote, checking your credit report for mistakes, and making sure your address is up to date on your credit report and with credit providers.
4. Learning about investing
Typically, the earlier you start investing, the more you’ll feel the benefit. So it’s useful to get into the habit of learning how it works from a young age.
Investments are usually designed with the long term in mind. The longer your money’s invested, the more opportunity there is for you to potentially experience some investment growth. Over time, you could even see growth on top of that growth, known as ‘compound growth’. Just don’t forget, the value of investments can go down as well as up and you could get back less than was paid in.
5. Thinking about the bigger picture
One final healthy habit we want to talk about: thinking long term and financially prepping for the future.
Let’s say you’re paying into a pension plan. A pension plan is an investment – so, again, you could potentially benefit from compound growth over time. Plus, pension plans come with tax benefits, meaning you can get a bit of a financial boost from the government. If your employer set up your plan, they’ll typically also pay into it.
Retirement can feel like a million miles away when you’re young. But planning as early as possible can help you achieve your financial goals. So no matter how you intend to fund your future, it’s a good idea to think ahead.
Got a Standard Life pension plan? If you want to make a one-off payment into your plan, you can usually do this online or on our app. You may also be able to change your monthly payments in this way. If your employer set up your plan and you want to change your monthly payments, get in touch with them to find out how this works for you.
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The information here is based on our understanding in June 2024 and shouldn’t be taken as financial advice.
A pension plan is an investment. Its value can go down as well as up and could be worth less than was paid in.
Your own personal circumstances, including where you live in the UK, will have an impact on the tax you pay. Laws and tax rules may change in the future.
Standard Life accepts no responsibility for information in external websites. These are provided for general information.