Published October 30, 2024 • 5 Min Read
TLDR
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A recent RBC poll reveals that 75% of Canadians believe they have strong financial habits, yet 73% admit to actions that could be hurting their financial wellbeing
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Good money habits are strongly tied to overall wellbeing, including reduced stress, improved sleep and solid personal relationships
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Developing sound money habits takes an ongoing commitment and long-term view
How good are your money habits? If you answered they’re in good shape, you’re not alone – according to a recent RBC poll, 75% of Canadians believe that they have strong financial habits. The thing is, the reality is often much different. In fact, this same poll reveals that more than a third of respondents confessed to not setting financial goals (38%), not dedicating time to financial planning (37%) and failing to monitor their expenses (34%) – all of which are essentially the definition of a good money habit.
So how good are those money habits, really?
If like many Canadians you’re nurturing a discrepancy between how good you think your habits are and how good they actually are, there are ways to help bridge that gap.
Why are good money habits important?
The link between healthy financial habits and overall wellbeing is significant. When you adopt good money habits, you can help reduce financial stress, increase financial security and boost your peace of mind. Multiple studies have found that money worries are the greatest source of stress among Canadians – in a recent study, four in 10 revealed to have trouble sleeping at night due to financial stress and about half said their mental health is negatively impacted by thoughts about their finances. Money is also a major cause of strain on personal relationships.
While some aspects of your finances aren’t all that easy to change (your income and your rent/ mortgage payments are tricky to adjust overnight), developing good financial habits can give you some control over your financial situation, thereby reducing stress, upgrading your sleep and improving the dynamics with your friends and family.
When the right financial habits don’t stick
Canadians love making resolutions – at the start of 2024, over half of individuals polled in a media survey revealed they had planned to rein in spending and make other behaviour changes when it came to money. But making financial resolutions and sticking to them are often two different things, and many people with good intentions fall back into habits that don’t do them financial favours.
Like with any behaviour change – whether it’s exercising, eating better or budgeting – it takes ongoing commitment and a long-term view.
Easier said than done? You bet. But there are some tips and tools that can help.
Improving your money habits over the long-term comes down to a few fundamentals: It has to be easy, it has to become part of your routine, and it requires a ‘progress over perfection’ mindset.
6 ways to help improve your money habits:
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Set up automatic transfers to your savings account.
The adage “pay yourself first” is a favourite of financial experts because it works. Setting up automatic transfers from your chequing account to your savings account on a regular basis ensures you “get paid” and forces a savings routine that you don’t even need to think about.
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Use a simple trick to control impulse buying.
If you’re an impulse shopper, it can be hard to avoid the urge to buy something that catches your eye. Next time you feel compelled to buy something you might not need, set a 24-hour rule for yourself. If after that time you still feel it’s a must-have purchase, go ahead. Just give yourself that cooling off period first.
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Set goals.
When you set a financial goal for yourself, anything you spend outside of your essential expenses cuts into your progress towards achieving it. Whether it’s a smaller short-term goal (i.e., a new smartphone) or a more meaningful long-term goal (i.e., a down payment on a house), keeping an eye on the prize can keep you motivated to maintain good financial habits.
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Ditch those unused subscriptions.
A common drain on bank accounts these days is subscriptions and other recurring costs. Get in the habit of reviewing what you’re paying for and whether you’re actually using the service. Keep an eye out for subscriptions and memberships that renew automatically.
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Don’t let a misstep derail you.
Remember, you’re only human. If you overspend one month or make a purchase you later regret, don’t give up on your healthy money routine. A ‘progress over perfection’ mindset is essential to achieving long-term success.
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Use easy-to-use budgeting tools.
While setting financial goals and adopting good financial habits takes time and might seem difficult, you don’t have to do it alone. As Sumit Oberai, EVP, Personal Banking and Digital Technology at RBC says, “With the help of world-class digital capabilities like NOMI, available through the RBC Mobile app, clients can automate savings, take the manual calculator work out of setting up and tracking a budget, and even forecast future cashflow. It empowers clients with insights and easy ways to incorporate good financial habits every day, which can make them feel better and more confident in managing their money.”
In fact, NOMI has proven to be successful with RBC clients, playing a big part in help them manage their everyday finances by removing the friction associated with making good financial routines stick.
Developing good money habits can have a long-standing impact on your personal and financial wellbeing – no matter what age or stage of life you’re in. It’s never too early – or to late – to start a strong financial routine. Using tools that make it all easier can smooth your path to success.
Learn more about how NOMI can help you manage your spending and develop good money habits.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
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