No matter whether you live spontaneously or tread a straight-and-narrow path, when it comes to finances, we all share something in common: We’re creatures of habit. This isn’t necessarily a bad thing — unless, of course, you're a creature of bad habit.

Our Money Habits

Our money habits can run the gamut. Even those who are completely ambivalent toward all financial matters have some sort of money habits (even if rooted in that very ambivalence). Meanwhile, others analyze to a fault. No matter is too small for over-examination. Neither of these extremes is healthy.

Interestingly, both extremes are likely grounded in the same emotion: fear. While fear can be a great motivator, it can also be a great paralyzer. Some people chose to take no action when faced with fear, perhaps because they don’t believe they have a solution.

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Moving from these extremes, we should find that many people have money habits that are so ingrained that a person rarely think sof them, even though he or she does them routinely. These can be habits of budgeting, balancing checkbooks, tracking expenses, and saving. If you’re one of the many people who throw all their change into some repository and allow it to accumulate, then you’re exhibiting a financial habit.

Many of these routines are beneficial. Habitual activities related to planning, tracking, and budgeting help us to understand and manage our financial affairs. Other habits can appear benign, but have long-term detrimental effects.

Obviously, ignoring one’s financial affairs — whether due to fear or other reasons — can only cause problems down the road. But the insidious effects of negative money habits like debt mismanagement, overspending, and procrastination on financial issues can also slowly accumulate over time.

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Good money habits of budgeting, tracking, and planning may very well bring these negative habits to light so that they can be addressed. In the absence of good habits, negative ones fester as a disease; they often build to major problems before they are diagnosed.

Good Money Habits: Creating a Financial Cornerstone

The good news is that we get to choose. We can select which money habits become the cornerstone upon which to build a healthy financial future.

If you’re diligent in following a budget, then you should always have a clear picture of your financial position. Hence, issues like large amounts of debt shouldn’t appear by surprise.

Simply tracking expenses — a sort of retrospective budgeting — will also sound alarms before major issues arise. Likewise, having a formalized financial plan and monitoring your progress towards your goals has the benefit of alerting you to issues before they become problems.

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Good money habits like these share something in common: All of them involve some degree of actively monitoring your financial activity. This is the key element of your cornerstone financial habit.

When a cornerstone is placed for a new building, it is placed with great care. It is the first stone set, and all others are set from it. It determines the orientation of the building. A cornerstone money habit similarly serves as a basis for one’s financial foundation.

If you’re a careful planner and budgeter, then you will likely build a solid financial house.

If you’re haphazard with your day-to-day financial activities, then your financial future becomes less certain.

Final Thoughts on Starting Good Money Habits

Certainly, as a financial professional, I advocate being diligent in planning and tracking your financial matters. But any effort is better than none.

Even a habit of pausing before each minor expense to consider its importance can make a world of difference. I don’t think frugality is necessarily a good goal, but spending with reckless abandon will never build real wealth, either.

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Perhaps you aren’t a financial DIY-er. In that case, you may want to enlist the services of a financial adviser.

Habit begets habit. Being cognizant of your financial activities will lead to better financial decision-making. Good money habits — even small ones — add up. Start by selecting a cornerstone habit, whether that’s budgeting, planning, or tracking — whatever works best for you. From there, begin to build the financial future you want.

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