Start now for a better financial tomorrow.
We all get into bad habits with our money from time to time. However, for some, those bad habits build up, one after the other, until they become so ingrained they seem impossible to break. The good news is that you can change the bad money habits of a lifetime as long as you’re willing to put in a little work.
Habit: blind spending
Change: start to budget
If you’re not budgeting every month then you’re not really managing your money. You’ll have no real idea of what comes in and you won’t be keeping track of what you spend. This means that you won’t have any processes in place to identify where you’re wasting money and you could be overspending every month. The solution is simple: sit down once a month, list income and expenses and work out where you want your money to go.
Habit: maxing out credit cards
Change: clear the monthly balance
Spending on credit cards can seem like free money – until the interest kicks in. If you’ve got a large total sitting on a card month after month look closely at what you’re paying in interest. It should be enough to shock you into action. Start paying more than the minimum every month. If you can, clear the balance. That way more of your money will be your own every month and not lost to interest.
Habit: no savings
Change: start small
Savings will give you financial freedom in the future and you don’t have to sacrifice a lot of your income to create them. Start putting aside a small amount every month into a separate account – do this straight away, as soon as you’re paid so that you don’t get tempted to spend it instead.
Habit: too much debt
Change: cut back and repay
If you’ve just got into the habit of having debt – and relying on it – then you might have accumulated quite a large sum that you owe to creditors. If that’s the case it may seem impossible to pay off and so maybe you just haven’t even tried. According to the personal finance experts at , the first step is to stop spending and start living within your means so you don’t need more debt, especially if you have debt such as . Then, create a repayment plan that will take you from here to being debt free, no matter how many steps that involves.
Habit: impulse purchases
Change: stick to cash
Impulse buying is a bad habit. You may do it through boredom or loneliness, to cheer yourself up or to celebrate something. It often ends up with an expensive purchase – usually on a card – that you didn’t really need. Next time you get the urge to impulse buy, pause and ask yourself why you’re really making the purchase. If you want to avoid any risk of impulse purchasing then only take a limited amount of cash out with you when you shop, and no cards.
Habit: no retirement provision
Change: start now
If you’ve put off saving for old age and it seems to late, it’s not – just start now. There are ways to maximise the funds that you have, such as investments and a pension. The important thing is that you get out of the habit of avoiding the issue and start making plans instead.