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Have you ever wondered where your money goes every month? You work hard but it always seems like you don’t have any money, or at least not as much as you assumed you had. The biggest culprits for this lack of money are often our bad financial habits, such as buying things that never even get used.
In fact, a recent survey showed that households waste over £9000 a year on unused items such as clothes and beauty products, unecesary contracts and wasted food and drink products.
So if you need to get that money back, take a firm look at some of these bad money habits. Just like unhealthy habits that can put your health at risk, making bad financial decisions regularly can have serious consequences on your financial situation.
Determining what the bad money habits are will help you avoid them and overcome them successfully.
- The dreadful impulse purchases
Impulsive spending can become hard to control but there are some simple ways to get out of the habit. Wait a moment before making a purchase, focus on thinking about whether that purchase is a good decision. For bigger purchases you may want to sleep on it to make sure you definitely want to spend out.
Online shopping makes it so easy to buy almost anything you want, objects, clothes, shoes, bags, technology and more. However, for impulsive buyers, this can be really unhelpful.
A simple tip can be to choose not to save your card details in the online checkouts – when you have to take the extra step to fetch your card and input the details it gives you that extra space to consider your purchase again.
Having a budget to refer to can also be helpful as you can take a quick look to check whether things are actually affordable right now before clicking buy, which can help you avoid being sucked in by shiny promotions and advertising.
Read more: How To Stop Emotional Spending
- Lack of budget
Not having a budget can make it really hard to manage your income and keep on top of outgoings and spending.
If you don’t have one drawn up, now is a good time to get one laid out! It doesn’t have to complicated, I love to use a spreadsheet for mine, but you can just as easily set it all out with pen and paper.
Write down all your income, along with your fundamental expenses such as rent or mortgage, utility bills and so on. Don’t forget to include any debt repayments and regular outgoings.
Once you take away your outgoings from your income, if anything is left you can decide whether to allocate that to savings, or towards spending.
Using a budget can really help you become more mindful of spending, and help you work towards financial goals.
Read more: How To Stop Being Broke For Good >>
- Bad personal habits: vices and customs
There are so many habits that can become really expensive! Mine is buying too many takeaways, it’s not good for my wallet or my health, but I’m easily swayed to avoided cooking by ordering in!
It could be smoking, drinking, gambling, compulsive shopping, or any number of things that have negative impacts on our financial health. Identifying what these are and working towards changing them can have a great effect on your finances, leaving you more money to set aside the money you save to put towards things that help you towards your financial goals.
This might mean putting into savings, or building an emergency fund for any unforeseen expenses.
- You don’t switch and save
Loyalty isn’t always the best approach when it comes to spending money on services and subscriptions. It’s often more expensive to stick with the same supplier than it is to switch to a cheaper deal.
It’s quick and easy to find a good deal, just use a comparison website to find the best price for what you need and then it’s simple to switch through, once you’ve signed up most companies will take care of the switch for you.
It’s always worth considering switching provider to save money for things such as gas and electricity suppliers, broadband and telephone providers, tv subscriptions and so on.
Don’t forget to check cashback sites too, as you can often find an extra cash incentive to switch!
- You use credit cards like it’s your money
“I’ll just pop it on the credit card…”
It’s so easy to shop using a credit card and not see it as ‘real’ spending. That is, until the bill comes through. If you find yourself heavily reliant on credit cards, this can lead to getting into further debt as interest builds up and late payment fees can be charged.
Whilst there are smart ways to use credit cards, it might be worth considering whether your credit card use is helping or hurting your financial situation.
- You don’t plan and save in advance
Not saving up in advance or being unplanned can lead to having to spend more than you’d like. For example, if you don’t have an emergency fund, and suddenly your boiler breaks, you may not be able to afford to fix it, leading to needing to turn to expensive credit to cover the costs.
In the same way, taking out finance for things such as cars, or taking on loans rather than using savings can end up working out a lot more costly. A little bit of patience to save up for things you want can mean better financial security long term, even if you have to wait for the delayed gratification.
Even simple things, like planning in advance for days out or holidays leaves you time to shop around for the best deals and prices, saving you money.
- You’re not enjoying the benefits of loyalty programs
Many companies offer discounts and bonuses to their regular customers. It is good to take advantage of these loyalty programs because they are not just bonus cards where points accumulate for later discounts. For example, airlines sometimes offer free flights! So as not to lose your dozens of loyalty cards and spend time looking for them when you need them, you can install an application on your phone or tablet; it will allow you to keep them all in one place.
Many companies offer discounts and bonuses to their regular customers. It is good to take advantage of these loyalty programs because you can often save money. For example, it’s free and easy to sign up for a Tesco Clubcard, making you eligible for Clubcard prices while doing you shopping, lowering your overall grocery bill.
There are loyalty schemes for so many things, whether they offer points to accumulate for discounts, freebies, airmiles and so on.
It’s worth looking at the places you do regular spending to see if they offer loyalty rewards.
- Finding yourself in the red before the end of the month
If you still have to wait a week for your salary and find yourself having to consume rice every day to be able to last until the end of the month, we have bad news for you: you are spending your money badly. If you distribute the costs well, there should never be a period like this. It may be worth revising your budget and excluding expenses that are leading you to the bottom line.
If you’re struggling to make your money last the whole month, then you may need to work on money management. If you feel like you really just can’t make ends meet you may need to look into help and benefits, or maybe try and find ways to bring in extra income.
If this isn’t the case though, it could be improved just by changing some money habits, by spending less, changing up subscriptions, adopting some more frugal habits perhaps. There are lots of ways to try and stretch your budget and make your money go further.
- Having a lot of ant expenses
How does that morning coffee in your favorite store affect you? How is it possible that that little dinner impacts your finances? Let’s see this bad financial habit. These expenses are known as “ant expenses,” and they are small irrelevant daily consumptions that are made constantly and without even noticing it.
They are easily done without any bad intentions. Ultimately, what happens is that your money is leaking in small but constant amounts that come out of your budget, and that, apparently insignificant expense is not perceived as a financial problem.
Actually though, these all add up and can become significant amounts over the months and years.
Identify the most recurring ‘ant’ expenses and decide to eliminate or reduce them. We’re not saying give up everything you like, but choose ant expenses that you don’t want to do without and try and limit your monthly consumption.
- Not consulting account statements
The last bad money habit is not keeping an eye on your bank and credit card statements. Account statements are documents that allow you to verify and control bank transactions and credit card consumption. These include data such as the available balance, the quota used, the minimum monthly fee, rates, cut-off dates, amounts debited, etc. These data will allow you to clarify doubts, better use banking products, avoid over-indebtedness, and understand your spending better. Another way to do this is by keeping a spending diary for a few weeks, this can really help you get a handle on your spending and financial situation.
Identifying your bad money habits and plugging your money leaks is a great start to keeping your finances happy.
Read more: 15 Ways To Trick Yourself Into Saving Money >>