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How to stay financially healthy

How good habits can help you achieve financial wellbeing

Forming healthy financial habits takes time and effort. In fact, research by behavioral scientists (European Journal of Social Psychology) suggests that it takes more than 2 months - 66 days to be exact - for a new habit to form and before a behavior becomes automatic.

  1. Live within your means
    Keep track of your monthly income and expenses and find ways to free up funds to cover your expenses if you need to. Set a budget for how you will spend the money you earn.
  2. Spend wisely
    Get into the habit of dividing up your expenses into needs, wants and savings or debts. If it’s appropriate, aim to spend 50% of your income after tax on needs, 30% on wants and 20% on savings and debts each month.
  3. Free up funds
    If you're not saving as much as you'd like, or find it hard to cover your costs each month, look for ways to reduce your outgoings. Also, think about how you might increase your household income.
  4. Build emergency savings
    Aim to build up enough savings to cover at least 3 months of essential expenses, in case of emergency.
  5. Avoid excessive borrowing and manage your existing debt
    Aim to borrow only what you can reasonably afford to pay back. Take steps to manage debt that you have already, for example, cut back to free up capital, approaching your lender for support, or consolidating debts.
  6. Save for the future
    Start saving for your retirement as early as you can. The younger you start, the bigger your retirement fund. Remember that compound interest quickly mounts up, which is the interest earned on previously earned interest.
  7. Protect what matters
    If you can, take out insurance to protect you from risk that you would not be able to cover yourself, like losing your household’s main income through illness or injury.
  8. Beware of scams and fraud
    Online financial fraud is on the rise, so take steps to avoid becoming a victim of cybercrime. Remember the saying if something sounds too good to be true then it probably is.
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Financial wellbeing
HSBC offers these articles for educational purposes only and they should not be considered professional or investment advice. While HSBC is pleased to offer these articles as an educational service to our customers, HSBC does not guarantee, warrant or recommend the opinion or advice or the product and/or services offered or mentioned in these articles. Any opinions, judgments, advice, statements, services, offers or other information presented within an article are those of a third party and not HSBC. For a comprehensive review of your personal finances, always consult with a tax or legal advisor. Neither HSBC, nor any of its representatives may give legal or tax advice.