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You may be wondering what a life fully debt free life may be like. Dreaming and fantasising about not owing any money to a school, credit card, or bank… right?! Well stop dreaming and start planning because living fully debt free is 100% capable and possible! Here are 15 habits of debt free people that you need to learn TODAY!
Disclosure: I am not a financial planner/professional, this content is not to be taken as or replace professional advice and is for informational purposes only.
1. Save Everyday- Habits of Debt Free People
This is crucial. Whether its a couple of dollars per day or a couple hundred per week, saving towards a certain goal (retirement, vacation, emergency fund, etc) saving is necessary. For example, if you save $5 everyday from January 1, by the end of the year you’ll have $1825!
The Opportun app is wonderful for those who seem to have trouble saving. All you do is set a goal and it saves money to that account for you and alerts when your goal has been reached. Having a separate savings account is also important to separate your everyday spending from your emergency fund and etc. Join the Opportun app and get a free $5 start up now!
Pay Cash
This step doesn’t have to be in literal cash, but it surely helps! I’m a person that has several credit cards and loves paying credit, but I ALWAYS pay those bills in full every single month. I use my credit card like a debit card. If I can’t pay it back right then and there, I won’t get it.
One of my friends also says if she can’t afford to get it twice then she won’t make the purchase. This is a great mindset to develop when you want to be debt free.
Self Control- Habits of Debt Free People
I promise, you don’t need that $5 cup of coffee every single day. Of course, spending money on things we love is what makes life enjoyable. However, allowing spending habits like eating out everyday or constant buying clothes can bring more harm than good.
Having self control is a necessary habit of debt free people. Go through your own budget and see where flexibility lies and apply it.
Spend less than you make
Sometimes, the people that make the most money are always the ones living pay check to paycheck or constantly transferring from their savings to checking.
You never want to spend more than you make. Saying this may seem obvious for some but debt free people always make sure to save a certain percent of their income each month. Setting a budget to visually see where and how your money is flowing also helps to better manage your finances.
Making Long term & Short Term Goals- Habits of Debt Free People
This is an extremely important habit of debt free people! Creating goals is key to financial freedom. Whether your goal may be short term like saving up for a new camera or long term such as saving for a big wedding. Just for reference, saving $10 a day comes out to be over $3,650 per year. This can easily pay for a new trip, help to purchase a new item, or save for an emergency fund.
Creating short/long term goals truly help money management as well as life management. One of my favorite ways to save for goals is through the app Opportun. Opportun is an app that takes money out of your account each day for aa certain goal. This method is perfect for those who are a bit scared of opening their bank account or need extra assistance saving.
Saving for an Emergency
This. Is. KEY! Debt free people will always have an emergency fund. Nearly 60% of Americans don’t have $1,000 saved up for a rainy day which is kind of scary. No matter what field you’re in or how much money you make, maintaining an emergency fund is so important.
Whether it’s needed fro a car, hospital visit, or anything else, emergency funds can always come in hand when necessary. The goal is to have at least $1,000 in a separate, non-touchable savings account. Working up, 3-6 months worth of savings is certainly ideal.
Multiple Streams of Income- Habits of Debt Free People
Having multiple streams of income is key to financial freedom! For example, if you’re a blogger, there are many different revenue streams your income can come from. Digital products, affiliates, sponsorships, and ads are just a few income streams for content creators.
Even if you’re working a full time 9-5, there’s more than enough time to create a separate income. Consider dog walking, blogging, completing surveys, or babysitting on the weekends to have extra money coming in. Different incomes can help to cover spending money/grocery bills whereas the larger more consistent income can comfortably cover rent and other living expenses.
Learning to Invest
Every rich person invests and is ready to embrace the possible risks that come with it. Check out the well known New York Times Best Seller, Rich Dad Poor Dad. The rich will always include investing as one of their income streams. Research stocks, grants, or crypto to learn which one of best for you and start investing today.
Working Smarter not Harder- Habits of Debt Free People
Lot’s of people think that hard work equates to high earnings which is not necessarily true, especially in the USA. As a child of 2 immigrants, I’ve seen personally that hard work does not necessarily get rewarded. However SMART work, is when the money comes rolling in.
High paying jobs accompany skill work like tech, finance, medicine, and even certain blue collar jobs. So if you’re in the 9-5 field, obtaining a skill that’s hard to replace like coding is the definition of working smarter.
Sticking to a Budget
It’s one thing to set up a budget and a whole other thing to actually stick to it. When creating a budget, it’s important to be realistic. So if you eat out everyday, setting your restaurant budget to $15 for the month wouldn’t be realistic.
Go into your bank statements and see how much money you bring in and how much goes out. Track each expense and create a budget to follow. Feel free to change it each month until you find something that actually works.
Use the 50 30 20 Method- Habits of Debt Free People
This method splits your income and spending into 3 different ways. 50% of your income goes towards needs such as rent, groceries, insurance, bills, and other necessities.
30% of your income will go towards wants like eating out, shopping, and having fun with friends. 20% of your income goes towards savings, investing, or retirement fund.
Feel free to switch it up and have 20% for wants and 30% for savings if you have a specific goal in mind or want to reach retirement faster.
Cook Often (Stop eating out)
One habit debt free people always do is eat and cook at home. Eating out is one of the quickest ways to creating a deficit in your bank account. Not only is eating out each day bad for you wallet, its also extremely unhealthy.
You never know what type of oil, preservatives, or seasonings restaurants use which is why I try to keep all my take out limited. Recognise your favorite cuisine and find a recipe blog; get to saving money ASAP.
Check out delicious vegan Caribbean recipes on my food blog!
Know when to say No- Habits of Debt Free People
This means saying no when you see that fancy new outfit, unnecessary shiny technology device, and eating out with your friend every single Friday. People who are debt free have self control and know the difference between wants and needs.
Of course we like to spend our money with freedom, but knowing when to say no is the biggest difference between a debt free person and not.
Spend Less than you Earn
The social definition of income inflation is basically increased expense when a raise or bonus has been included. Just because you are making more money, doesn’t mean you should immediately start spending more. The goal is to make sure only half of your income goes to necessities (rent, bills, utilities, etc) and the other half goes to wants and savings.
Opening a Savings an online Account- Habits of Debt Free People
Opening a savings account in an online bank account helps to prevent you from transferring money when you want to get that cup of coffee.
Online bank accounts typically take about 24 hours to transfer so its an immediate deterrent to keep you from stealing money from yourself. Not to mention online bank accounts like Ally typically have a much higher APY than big bank accounts.
Speaking positively about finances
This one may sound a bit corny but it’s necessary to building an abundance mindset. Stop saying phrases like “I don’t have any money” or “I’m so broke”.
When you constantly repeat something over and over, it will eventually become true even if it’s not. Only speak what you want to manifest, so speak words of positivity and encouragement when it comes to finances.
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