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4 Smart Habits of People With a Written Financial Plan

We're not all planners by nature. Some of us like to wing our way through life, while others need their schedules mapped out well in advance. But when it comes to managing your money, creating a written plan could help you stay on track and meet your goals. Here are some of the habits people with a financial plan tend to uphold, according to Schwab's 2019 Modern Wealth Survey.

1. They save money each month

Social Security won't provide enough income for you to live comfortably in retirement, which is why it's crucial that you save for your golden years on your own. Now the good news here is that 78% of people with a financial plan do save money every month (whether for retirement or other purposes). The bad news? Only 38% of non-planners do the same.

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If you're not in the habit of saving regularly, it's time to examine your budget, or create one if you don't have one yet, and identify ways to cut back on spending on an ongoing basis. Reducing some recurring expenses will enable you to free up cash that can be used to build a nest egg for retirement or meet other important goals on your radar.

2. They have emergency savings

You need emergency savings so you're not forced to resort to debt whenever an unplanned bill lands in your lap. That bill could relate to a home repair, an issue with your vehicle, a medical problem, or something else, and it could be substantial. That's why you really need a minimum of three months' worth of essential living costs tucked away in the bank. But while 68% of people with a financial plan have an emergency fund, only 26% of non-planners can say the same. As such, non-planners may find themselves forced to borrow money to cover unplanned expenses, whether in the form of racking up a credit card balance or taking out a personal loan.

If you're without emergency savings, it's imperative that you slash some expenses in the short-term to build cash reserves. That could mean no going out to dinner at all until your bank account is in a healthier state. At the same time, you might consider getting a side hustle to drum up extra cash for savings. Some suggestions? Consult in your regular field on evenings and weekends (provided your employer allows this), or take a hobby you enjoy, like graphic design or pet care, and turn it into a paying gig.

3. They automate their savings

The beauty of automating savings is removing the temptation to spend money that should be earmarked for more important purposes. A good 74% of people with a financial plan have their savings automated, whereas only 25% of non-planner have a similar setup.

You can automate your savings in a number of ways. If your goal is to pad your emergency fund, you can arrange to have a portion of each paycheck land in a savings account. If you're looking to build a nest egg, you can sign up for your company's 401(k) plan and have money filter into that account automatically. And if you don't have access to a 401(k), you can find an IRA with an automatic transfer feature and do the same.

4. They never carry a credit card balance and either make loan payments on time, or have no payments to make

Carrying a credit card balance can not only damage your credit score, but cost you a lot of money in interest. Falling behind on loan payments can similarly hurt your credit, making it more expensive for you to borrow money when you need to. An estimated 45% of planners make a point to never carry a credit card balance, and among those with outstanding loans (say, of the educational variety), they make their payments on time. However, only 27% of those without a financial plan do the same.

If you're already in debt, make a point of keeping up with your payments to avoid negatively impacting your credit score. Automating those payments is a good idea, since it'll take forgetfulness out of the equation. At the same time, use your credit cards wisely by only charging an amount you can afford to pay off by the time each monthly bill comes due. This will help you avoid wasting money on interest and putting your credit score at risk.

Even if you don't have a financial plan, it still pays to uphold the above habits that'll help you manage your money the right way. Furthermore, you might consider putting some of your top financial goals in writing. Doing so might motivate you to make smarter choices that really pay off in the long run.

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