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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.
In fact, it is projected that the normal household wastes 10 to 15% of their income every month. 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
- Lack of budget
- Bad personal habits: vices and customs
- You don’t switch and save
- You use credit cards like it’s your money
- You don’t plan and save in advance
- You’re not enjoying the benefits of loyalty programs
- You find yourself in the red before the end of the month
- Having a lot of ant expenses
- Not consulting account statements
Do you visit stores and buy items unnecessarily? Constantly making impulse purchases can be a main factor in the negative financial situation of many people.
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, and you will probably realize that it is a bad waste of money.
The new e-commerce is the most comfortable way to buy objects, clothes, shoes, bags, 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.
To avoid debt for unnecessary purchases online, we return to a very important point: managing a budget. Making a list of the specific things that you will need keeps you from buying unnecessary offers, promotions, or attractive products at the moment.
Read more: How To Stop Emotional Spending
The lack of a budget makes it impossible for you to manage your income, and therefore, you cannot work out how much your monthly limit is. If this is your problem, then learn to design your budget! Take a pencil and a paper and write down all the fundamental expenses that you cannot avoid, such as the payment of rent, services, food, daily use products, medicines, and payment of student fees, among others.
Indicate how much the cost of each is and add everything at the end. The resulting figure is the amount of money you must have to cover all these expenses and live well. The rest, you can allocate to savings or non essential spending. Keep in mind that you must respect the budget and avoid escaping from it at all costs if you want to achieve financial stability.
Read more: How To Stop Being Broke For Good >>
Smoking, drinking, gambling, eating in large quantities, or being a compulsive shopper are frequent vices that damage your health and impede your financial progress. Your health, bank account, and wallet will have excellent results if you stay away from bad personal habits and vices.
Difficult as it might be, breaking these habits can have great effects, so it’s worth the effort. You can then set aside the money you save to put towards things that help you towards your financial goals.
Saving is one of the smartest and most profitable financial decisions, allowing you to have an emergency fund for any unforeseen or planned need. Start by setting aside a minimum percentage, varying the amount of savings based on your monthly income and expenses.
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!
A credit card is not a form of income, and it is something that it’s easy for people to forget. Numerous people use it like it’s their own money and have to deal with the consequences later, but if this is a problem for you, it’s probably worth giving up on their use altogether.
Often, a large amount of money in a credit account can lead to the idea that you have extra funds that you can spend. However, debts of this type must be paid monthly so as not to have to pay interest for the use of this account and getting into deep credit card debt can result in difficult financial issues further down the line.
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.
Another example could be not planning your vacation in advance. This can seriously affect your bank account as the prices for tickets and hotel rooms in peak season are much higher as demand increases. But it is not only the time of year that affects flights’ cost since the days of the week that tickets are purchased are also important: Tuesdays and Wednesdays are the most profitable days to travel. The most unfavorable days in this direction are Sundays in July and December; ticket prices are taking off.
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.
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.
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.
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 well each type of operation you have made. In conclusion, they help you keep the accounts clear.
Identifying your bad money habits and plugging your money leaks is a great start to keeping your finances happy.