Driving Great Money Habits
Michael F. Kay
March 19, 2019
When I first started driving, seat belts were optional. My parents never used them (I’m not even sure they had any in the car), so neither did I.
But when my daughter was about five and I’d clicked her into her seat, she reminded me to put on my seat belt. From that moment on, I decided that I had to show her that it was an important habit for both of us.
Habits come from what we think of as “normal”—what we’ve witnessed or heard and then believed to be correct. We lean into our comfort zone and pull away from that which makes us uncomfortable. We’re human, it’s what we do.
You might already have great money habits if you had lots of examples to learn from growing up. But even those of us who had less than stellar examples can build positive money habits—by becoming more aware of our finances and learning to make the best decisions possible in each situation.
It doesn’t have to be tough or even complicated. You can create and establish meaningful money habits by examining each area of your money life and taking small steps that bring you closer to your ideal.
Let’s say for example that you want to buy a car. In the past, you might have made the decision without examining the details of its financial impact. Maybe that was what your parents did and has become a habit for you. To make decisions that are more thorough, there are some questions that you’d want to consider before proceeding with the transaction:
- Will you pay cash or finance the cost? Where will the money come from? What impact will using that money for a new car have on your overall financial picture, e.g. will you have to dip into your long-term savings or decimate your emergency fund?
2. If you’re financing, how much of a down payment will you make? What is the best rate available and for how many years? What monthly payment can you afford?
- Will your new car add to your monthly fuel cost or lower it? By how much?
- How will your auto insurance premiums be affected—and are you getting competitive rates from your current insurance carrier?
- Should you adjust the deductible and/or coverage for the new vehicle?
- What does your warranty cover and what out of pocket maintenance and repair costs do you expect over the next several years?