5 Smart Financial Habits It’s Never Too Late to Adopt

These simple strategies can make a big difference, even if your money habits have been lackluster to date.

If you’ve made it to your golden years (or at least your silver ones) with lackluster savings or no budget to speak of, maybe you feel like there’s little point in turning your financial habits around now. You might also feel overwhelmed about where to start.

Fortunately, it’s never too late to pick up helpful financial habits that can make a big difference, even in a short period of time. Think of it like the adage about planting a tree: The best time to plant a tree is 20 years ago, but the second-best time is today. Even minor changes, like setting aside a small amount of money to save each week, can help you accomplish your goals.

“Small but consistent savings really add up,” says Jennifer Owen, a certified financial planner with Juno Capital Strategy in Fairfax, Virginia. “If you can save just $25 a week, you’ll have $1,300 saved in one year.” Here are five healthy financial habits worth adopting, no matter your stage in life.

Financial Habit #1: Build Up an Emergency Fund

If there’s just one financial habit to focus on, it’s building an emergency fund. Having this money can mean the difference between being mildly irritated by a surprise expense and being burdened with debt by one. A study by the Urban Institute found that even a small emergency fund—between $250 and $749—helps lessen the chance of missing a housing payment or being evicted.

Financial pros recommend saving between three to six months’ worth of expenses. (You can use a home budget calculator to figure out that amount.)

Emergency-fund money should be used only for emergencies, such as an unexpectedly high medical bill or as a stopgap for temporary income loss. Starting one can be as simple as depositing $20 into an account. Choose a bank account where you can quickly access the money while also earning a decent amount of interest, such as a high-yield savings account, says Kevin Lao, a certified financial planner with Imagine Financial Security in St. Augustine, Florida.

To build your fund, set aside a certain amount or percentage of money to add each month. You can also toss any “extra” income—like a tax refund—into the fund. A good first goal is to save $1,000, says Tim Bauer, a certified financial planner and founder of Evergreen Financial Group in Billings, Montana. Try to do that within one year. After that, you can set incremental goals until you’ve saved the recommended three to six months’ worth of expenses.

Financial Habit #2: Automate Your Savings

Saving money is a lot easier to do when you don’t have to think about it. One easy way to start saving is to set up recurring monthly transfers from your checking account to a savings account. If you have a 401(k) or a Roth IRA, you can send money there, too. If you’re still working, consider splitting your direct deposit between your checking and savings accounts.

“Any incoming deposits should have automated instructions pushing a fixed percentage or a dollar amount from a spending account into a savings account,” Owen says. That’s what’s known as the pay-yourself-first method, where you save money before you use it to pay your health insurance premium or to go out to breakfast with friends.

“When you’re retired, you have to be especially intentional about saving,” Lao says. “You have to craft a spending plan, and if there’s a surplus, immediately earmark that money for a reserve fund.”

Financial Habit #3: Make a Budget

Good news: It’s never been easier to make a budget. The internet is chock full of free user-friendly budgeting apps like EveryDollar or Goodbudget, as well as budget calculators and budget worksheets (the Consumer Finance Protection Bureau has a good one). But spreadsheets or good old-fashioned pen and paper methods work just fine, too.

Before you create a budget, spend one or two months tracking all your expenses (the Goodbudget app can be very helpful here). You’re probably well aware of recurring expenses like a cellphone bill, but tracking everything can uncover how much you’re spending in squishier categories like food and travel.

A basic budget should list all your income, such as salary, Social Security payments, and investments, along with expenses, such as housing, utilities, insurance, debt payments, food, and travel. A great budget also tells your money where to go.

After figuring out how much you make and spend each month, set aside dollar amounts for certain expense categories, like the ones mentioned above. Don’t forget to add lines for savings goals such as retirement, an emergency fund, or education money for your grandkids, Lao says.

“When you create a purpose around your savings, I find you treat it the same way you would a mortgage payment or bill,” he says.

Financial Habit #4: Consider Long-Term Care Insurance

It’s probably no surprise how expensive health care and insurance can be. The average 65-year-old couple will need to save about $300,000 for health care expenses in retirement. And that doesn’t include pricey long-term care, which is trained care either at home or in a skilled nursing facility. The average cost of a private or semiprivate room in a skilled nursing facility is $105,850 per year.

That’s why it can be smart to look into long-term care insurance, a policy that typically pays about $160 a day for three years of care. The best time to lock in long-term care insurance premiums is in your late 50s to early 60s, Bauer says. But even if you miss that window, it’s still worth exploring your options.

The best decision for you will depend on your financial situation. You might not be able to afford the average $3,750 long-term care insurance premium for a 65-year-old couple. On the flip side, you might be able to absorb the cost of long-term care without insurance. Start by talking to your insurance provider about your policy options. Run the numbers to see if you would benefit—and if so, apply for insurance as early as you can to avoid premium increases.

Financial Habit #5: Ask for Professional Help

Even if you’re already retired, it can still make sense to tap a financial expert to talk through your finances. A financial planner can help with everything from creating a budget to estate planning to retirement investments. That’s important, because your financial situation will fluctuate even after you retire.

“Retirement planning has many variables and should be looked at as an ever-changing situation, not a destination,” Bauer says.

You might want to seek out a certified financial planner (CFP), which means the planner has passed the CFP exam and has agreed to the CFP Board’s Code of Ethics and Standard of Conduct. Some financial planners charge a flat fee for their services, while others charge an hourly rate (usually between $100 and $300). A fee-only financial planner is someone who gets paid only by you, whereas a fee-based financial planner is someone who might also be paid a commission based on the type of products they recommend to you. For help finding a qualified CFP, visit letsmakeaplan.org.

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