4 Financial Habits You Need to Master ASAP

How many of them have you mastered already?

Adopting the right financial habits can make a huge difference in how much money you end up with -- and how much stress you have surrounding managing your funds.  

It can be hard to know how best to arrange your financial life and what types of behaviors will help set you on the path to building a higher net worth. The good news is, there are four important behaviors everyone should try to adopt ASAP that could have a positive impact over the long term. Here's what they are. 

1. Living below your means 

Living below your means is the single most important financial habit you can adopt because it makes accomplishing all of your other financial goals possible.

If you are spending every dollar you earn just to cover the bills -- or to indulge in your shopping habits -- you aren't going to be able to save or invest for your future. You'll be stuck in a paycheck-to-paycheck cycle that means any unexpected expense could lead to disaster. 

But if you can spend less than you earn, this opens up the door to preparing for a rainy day and saving for big purchases that increase your net worth and improve your situation over the long haul. 

2. Budgeting 

Budgeting can also be one of the most important habits to start because it allows you to take control over your money and ensure you are spending it as wisely as possible.

If you don't think things through and make a plan for how best to spend your money, you could end up buying things you don't need or using your money on purchases that aren't really very important to you. It will be much harder to allocate enough to savings or to accomplishing financial goals.

When you make a budget, you can take more control over where your money goes and can make conscious choices. You can make sure you budget enough for retirement and big purchases, and can also ensure the indulgences you're spending on are truly the things you want most. 

3. Avoiding bad debt 

Sometimes, going into debt isn't a bad thing. It makes sense to get a mortgage, for example, because this enables you to end up with a home which is a valuable asset. But you don't want to take on a lot of bad debt, which is expensive debt for assets that go down in value instead of up. 

One classic example of bad debt is credit cards. Cards can be a great tool if you use them wisely, charge purchases on them, and pay off the balance in full and on time. But they have very high interest rates so if you charge vacations or other unnecessary purchases on them and get stuck paying interest, this could be a huge financial mistake that makes your financial life more difficult in the long run. 

You should aim to borrow only if you can get an affordable loan and if the money you are borrowing will help you grow your net worth over time. 

4. Investing

Finally, you should get in the habit of investing by opening a brokerage account and making a plan to buy assets that will earn you a generous return. Investing is a great way to build wealth since the money you put into the stock market (or other income-producing assets) will grow your net worth for you without any additional effort on your part.

The good news is, adopting these habits doesn't have to be hard. You can start slow with making a budget that enables you to spend less than you earn, and can commit to say no to expensive debt. And when you make your budget, you can plan to set aside some money to invest. 

If you stick to these habits over time, you should end up in great financial shape -- and you'll be very glad you acted.