Developing good financial habits is a way of making your money work for you.
And while for many it may seem impossible, it is doable.
A friend and I were talking about savings the other day. “You must teach me how to save,” he says.
My response: “Start with setting the target. It is one of the ways to keep you disciplined… Draw up your own savings plan and stick to it. If you are able to save more on some months than others, do exactly that. Make your own rules as long as you keep your eyes on the target and work hard to reach it.”
He then says it is not easy.
“I get it,” I say. “Think of it this way, having some money in your savings account in December is better than having nothing.”
This is exactly how I see savings. Having something is way better than having nothing.
Roger Eskinazi, managing partner at Tickmill, says two of the most important pillars of good financial planning are saving and investing, but these two principles don’t necessarily have to be mutually exclusive.
“By thinking of your investment decisions as part of your broader savings plan, you can obtain single-minded focus on what you envision for your future… Without a clear plan, it’s easy to fall into debt, overspend, or miss out on opportunities to grow your wealth,” says Eskinazi.
“The best way to approach saving is to think of it as an expense when you formulate your monthly budget. Doing this will allow you to shift your mindset to thinking of saving as a non-negotiable financial commitment, just like paying rent or utility bills. To stick to their monthly saving commitment, some people even choose to set up an automatic money transfer into a dedicated savings account at the beginning of each month.
“Generally speaking, saving is about setting money aside to meet short-term needs or emergencies. Contrastingly, investment is often seen as a way to grow your wealth over the long term. People often think of saving and investing as two different tick boxes in their financial plan, when really, combining the two can create a robust financial strategy that balances security with growth potential.”
He says “saving diligently is one of the most effective ways to build a solid financial foundation”.
“One of the key differences between saving and investing is that saving gives you immediate access to funds, whereas investment profits take longer to realise and are often reinvested.
“The best way to think about how saving and investing works together is to think of saving as a safety net that provides you with the liquidity you need to tend to unexpected expenses, without touching your investment capital.
“Without a proper savings buffer, you may find yourself having to sell investments prematurely to cover an emergency, which could mean losses or missed opportunities for growth. A strong savings base gives you the flexibility to invest without putting yourself at financial risk,” says Eskinazi.
Ross McMillan from Momentum financial planning says taking proactive steps to enhance our financial security is a crucial first step towards improving mental well-being and regaining a sense of control.
“Financial stress can trigger anxiety, panic and even depression, making it difficult to manage day-to-day life.”
October is Mental Health Awareness Month.
McMillan shares tips on how to foster a healthier balance between your money and your mind:
Recognise the link between money and mental health: Understanding that your finances are likely affecting your mental health is the first step towards breaking the cycle. Many people feel overwhelmed by debt, bills and other financial obligations, but they don’t always realise the toll it takes on their emotional wellbeing. Acknowledging this connection can help you approach both your mental health and your finances with more clarity.
Create a budget – it’s about control, not restriction: Budgeting is often viewed as limiting, but it’s really about taking control of your finances. A budget is a roadmap for your money. By knowing where your money is going, you reduce the uncertainty that causes stress and anxiety. A well-structured budget can help you prioritise necessities, manage debt, and set aside money for savings - all while giving you peace of mind.
Seek professional advice early: Many people wait until they are in deep financial trouble before seeking help, but addressing these issues early can prevent anxiety from escalating. Talking to a financial adviser can help you develop a plan to tackle debt, build savings and manage expenses. Even the act of discussing your finances with an informed neutral party will provide some sort of relief – giving you a clear vision of the path forward.
Access mental health support: Mental health professionals can help you navigate the emotional triggers behind your financial habits. If anxiety or depression is leading to impulsive spending or financial avoidance, professional help can provide the tools to manage these behaviours. You should never hesitate to seek support. If you don’t address the psychological aspect of financial stress, the effects can be far-reaching and can compound quickly to create long-term issues, which can be extremely difficult to resolve.
Take small steps to regain control: When both your mental health and finances feel overwhelming. It’s important to start small and work your way forward. Focus on manageable actions, such as paying off smaller debts or setting a weekly budget for discretionary spending. These small wins can build momentum and give you the confidence to tackle bigger financial challenges.
Breaking the cycle for better wellbeing: Addressing your financial issues proactively will not only improve your bank balance but also contribute to better mental health. When you understand the connection between money and mental wellbeing, you can take meaningful steps toward improving both. Seeking advice, budgeting effectively, and accessing mental health support are all powerful tools that can help you regain financial control and provide a cushion for your overall mental wellbeing.
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