Photo by Micheile Henderson on Unsplash
Bits and Pieces,  Lifestyle

Important Money Habits to Try and Start Before 2021

Money is a tricky subject. It can present you with hundreds of opportunities in life, but it’s also the number one cause of stress and depression. I feel very fortunate to have parents with really healthy money habits. It meant that I could learn from example, and I was taught to really respect money for what it is. I read somewhere that money is attracted to those who treat is respectfully, whereas it flows away from those who treat it carelessly. So today I’ll be sharing some important money habits that I think everyone should try to start in time for the new year.

Getting out of the ‘only’ mindset

When my siblings and I were younger and we’d ask our parents for something, we’d tell them ‘but it’s only x amount’. They would tell us never to use the word ‘only’, which is something I didn’t particularly understand when I was younger; although now that I’m older I can appreciate the meaning of this. Money isn’t something to take for granted or to go throwing around willy-nilly. You have to work hard to earn money and save money effectively.

Adopting the mindset of ‘it’s only x amount’, can become quite an unhealthy and unproductive money habit to get into. This is why I’m suggesting to anyone with this mindset to consider their spending decisions more carefully.

Realising that small amounts of money add up

Similarly to the ‘only’ mindset, spending £3 here and there may not seem like much money in the moment. However, these small sums of money eventually add up. If you decided to set this money to one side instead, you could save a surprising amount. This example is used all the time, but for instance, if you’re someone who buys coffee on your way to work everyday for the cost of £3.50. That equals £17.50 a week, and then over £900 in the space of a year. This is a crazy amount of money to be spending on coffee in a year; especially when it’s just as easy to take a coffee with you from home instead.

money habits to start in 2021
Photo by Katie Harp on Unsplash

Trying not to treat other people too much

Obviously it’s nice to be generous and treat other people occasionally, when you’re in the position to do so. Maybe you have a turn-taking system in place, or perhaps it’s a special occasion. However, if you don’t get the same in return, and most of the time you find yourself paying for other people, you have to ask yourself if the extra expense is worth it?

I have a friend who used to do this; she’d constantly pay for her two friends and her sister when they’d go out drinking or to restaurants. I used to ask her why she did it so often, and she didn’t even really have a reason. I tried to explain that she could save so much money over the course of a few months, if she wasn’t spending about £80 per week on other people.

Avoiding your overdraft

When I was a student, it was very common for people to go into their overdraft. But a lot of the time I found that this was an easily avoidable situation, if they had better money habits. Especially as a student when you’ve already got enough debt to be worrying about anyway! I think it’s easier to pretend that the overdraft doesn’t exist, so that you can’t be tempted to spend money that you don’t have on things that you might not necessarily need. At the same time, I understand that everyone’s situation is different, and it isn’t always possible to avoid this. I would just recommend that anyone who CAN avoid going into their overdraft definitely should.

Finding a purpose for your loose change

All of those loose coins add up to something, and it’s surprising how much that actually is. Surely I’m not the only person who would do the following: pays for something in cash; puts the change straight into my pocket; takes it out of my pocket once I’m home and leaves it on the side for days/weeks/months. Thankfully this money habits I was able to break, because I’d end up with random coins in my work locker; in various pockets in clothing items or different bags; or just generally scattered around the house.

I decided to spend about £15 on a Terramundi Pot, which is a beautiful little savings system. There are loads of brands out there that offer the same thing. Personally I liked the Terramundi Pots because they’re such pretty designs, and they were all hand-painted in Italy. With these savings pots, you can’t get money out once you’ve put it in, unless you’re prepared to smash it.

Creating good money habits, Terramundi pot
Photo by author

Creating an emergency fund

I cannot stress enough the importance of an emergency fund. Apparently around 50% of adults in the UK are financially vulnerable. This means that redundancy, or a sudden increase in monthly bills, could result in a lot of stress and other potentially big problems.

I would suggest that even if your current savings are at £0; at least the first £1,000 you’re able to save should be set aside as your emergency fund. From there you could look at saving for a holiday or a car, and so on. But at least you know you’ve got £1,000 should you ever really need it. You can always add to this later as well, because the more in your emergency fund, the better!

Setting yourself savings goals

A lot of people find that they work for effectively if they have specific goals in mind. Use 2021 as a fresh start, and a chance to figure out exactly what you want to achieve in those 365 days. According to (who have based their information on the Office of National Statistics); roughly 40% of 22 to 29-year-olds have no savings whatsoever. About 10% of this age group have between £2,000-£3,000, and only around 25% have more than £6,000 in savings.

The idea of trying to save large amounts can be unnerving. But if you decide to try and save £20 a month, you’ll have over £1,000 by the end of the year. Based on what we said earlier, that’d literally be like giving up your daily coffee on your way to work. That’s it. Whereas if you were in the position to save £50 a week, that’d give you £2,600 by the end of the year. So by putting a little bit away each week, you’d already be in that 10% by Christmas 2021.

I hope this post has inspired some of you to take a look at your own money habits; and see if there are any positive changes you can make to your spending. 2021 will hopefully be a much better year for us all 🙂

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  • Nancy

    It is so important to save money where you can. That “only” mindset will get you spending unreasonably. It adds up!! When you look at that big picture, that daily “only” $5 on Starbucks can end up being a good $1500 at the very least. I find that when it comes to eating with people and such, people should be able to take care of themselves. General rule, unless you owe them for something like a big favor. Thanks for sharing these tips!

    Nancy ✨

    • Emma

      I completely agree, and it’s only when you really think about those large sums that people realise that they probably don’t need that coffee etc. Thank you for your comment.

  • Markus + Micah

    Lovely advice. Our goal for next year is to work on our emergency fund. It is really important, as this pandemic highlighted. Your tip on not underestimating small amounts of money also makes a lot of sense. ‘A lot’ is just several ‘a little’ combined, after all. We hope you have a prosperous 2021!

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