I have always loved this quote, commonly attributed to Warren Buffett:

“The chains of habit are too light to be felt until they are too heavy to be broken.”

Well, whoever said this first (and in whatever form) was quite wise and right. It seems like plain common sense.

The quote reminds us that we have to watch our daily or frequent actions carefully, because by the time our actions become habits, they have become “too heavy to be broken”.

On a more positive note, it reminds us that we can set good, healthy habits by creating new habits.

When it comes to personal finance, here are some good financial habits that I think people should have (in no particular order, as they are all important):

Habit 1: Make a budget. The budget should cover your financial needs and adhere to the budget religiously.

Habit 2: Pay your bills in full, on time. Immediately pay off all bills, especially credit card bills, in full when they come in. Do not chalk up interest on credit card bills.

Habit 3: Live within your means. Within reason, try to spend less than you earn. You’d be surprised to find out how many people can make a lot of money each month, but are effectively living hand-to-mouth, while someone making effectively minimum wage can actually build up savings.

Habit 4: Maintain or mend things rather than replace them. Take care of your existing belongings and maintain them in good condition, because maintenance is cheaper than replacement. In fact, this principle also applies to your health: maintain and take good care of your health, because as the saying goes, health is wealth.

Habit 5: Build an emergency fund. You can save money for large purchases; you can save money to invest; but you should also save money for an emergency fund, for a proverbial rainy day. People can debate all day about how large this fund should be. The point is that there might come a day where you might need readily available money. And there is always security and confidence in knowing that you have an emergency fund.

Habit 6: Prioritise paying off your debts. One major example is a housing loan, or mortgage. Pay off your mortgage as quickly as possible. When your house is fully paid off, you can feel true financial freedom. Even if you have not fully paid off your house, making an extra house payment every quarter could save you tens of thousands in interest payments.

These good personal finance habits don’t involve anything complicated, challenging, or complex, like investing or speculating in bonds, stocks, cryptocurrencies, or require technical financial knowledge.

They are simple habits, but they are useful and can help in gradually moving towards a state of greater financial freedom.

Stay safe on your journey towards financial freedom.