Bad money habits are either developed in adulthood or picked up from our households as children. All in all, bad money habits are hindering you from reaching your financial goals. They are the reason you will always be further from the life you envision.
If you want to achieve your goals, start by identifying the money habits holding you back and working on dropping them.
Drop these bad money habits to develop a good relationship with your money.
1. Impulse Buying
Nothing is really thought over while buying things in the spur of the moment. Everything is triggered by instant emotions, which fade away not long after.
The items bought often end up being something you don’t need, too expensive or out of your budget, and sometimes even poor quality.
The items often end up not being used, which is a waste of money.
Always plan for any purchases, whether big or small. Let the planning start with small items such as groceries; it will teach you discipline when it comes to other items such as clothes and shoes.
2. Neglecting Budgeting
Your budget will help you visualize how you spend your money and be able to redirect it to the right course. Not having a budget will 100% have you spending money on things you do not need at the expense of those you cannot survive without.
Always have a budget that highlights all your varied and fixed expenses. Learning to stick to it will move you steps closer to your short-term and long-term financial goals.
Not having a budget increases your chances of sinking into debt, overspending, not saving, and being unprepared for emergencies.
3. Carrying Credit Card Balances
Not paying your credit card balances will have you paying high-interest fees, which will generally injure your finances.
Besides the high-interest fees, late payments could lower your credit score. This would make it very difficult for you to borrow money when needed.
And yes, late payments could affect your financial history for years; clearing the mess sometimes becomes very difficult.
While using credit cards has its pros, you should do it responsibly. Avoid spending more than you can pay at the end of the month.
4. Ignoring Financial Goals
Always have your short-term and long-term finances. What do you want to achieve at the end of the year? How are you going to achieve it? For example, do you want to reduce your debt by 30%? How much money are you going to put into debt payment to achieve this goal?
Your long-term financial goals should capture where you see yourself in 10-20 years. Maybe having saved enough for your child’s college education? Or probably living a comfortable retirement life? Put into action plans that will help you achieve these goals.
Saving money with no goals in place will have you splurging it all at any slight inconvenience.
5. Not Tracking Expenses
Tracking your expenses will help you plan and budget better. It will also help you stay within the limits of your budget. Your budget for this month does not have to be the same as for the next. You can always upgrade it to suit your financial needs better.
Not tracking your expenditure can make you spend more than you earn without knowing it. Track your expenditure to the last coin; it will help you determine areas you overspend in and how to improve.
6. Spending To Impress Others
With the age of social media influencers, and people living lavish lives on social media, it is very easy to get tempted to follow suit.
You do not need those fancy shoes just because everyone now has them. You do not need to move to that luxurious apartment just because your favorite social media influencer motivated you to.
Stay within your means, and don’t spend a coin to impress people.
In our day-to-day lives, we spend so much money to impress our friends and family. It could be going out to restaurants with them or buying them expensive gifts. While there is nothing wrong with showing kindness to the people you love, ensure the amount you spend is within your limits. There is no need to splash money on your friend’s birthday gift only to end up with no money for groceries.
7. Frequent Dining Out
Frequently dining out is a huge waste of your money. Stopping it today and cooking at home would save you lots of money.
Create meal plans, buy ingredients, cook in batches, and freeze for weekly consumption. This way, you will save money, time, and effort.
You should find alternatives if you frequently dine out to socialize with friends. You can invite them over and prepare a meal at home. You could also socialize over other hobbies, such as hiking together or visiting free art galleries and museums.
8. Paying For Unused Subscriptions
According to Statista, subscription e-commerce generated $23 billion in 2020. The figure was then projected to hit $28 billion in 2023.
This means people are paying for more and more subscriptions.
But do you need that subscription you timely pay for? Do you even use it? Why pay for Amazon premium when you only order once in two months? Why pay for Netflix when the only time you have to watch is over the weekend?
You have no business paying for that subscription if you do not use it. Drop that subscription and save that money.
9. Buying Brand Names Unnecessarily
Whether it is groceries or clothes, there is no need to spend so much on brand names. A lot of times, their quality is not as superior as it is portrayed to be.
You can get equally good knock-offs for way cheaper. This is especially true for clothes, bags, and jewelry. Get the replicas and save your money for something else.
For groceries, go for generic names. It is always difficult to tell them apart from their brand-name counterparts.
10. Using Retail Therapy
Had a bad day at work? Those shoes you have been eyeing may cheer you up.
This is how retail therapy works, and the only thing it’s doing is hurting your finances.
Stop going to the mall searching for items to cheer you up after any minor inconvenience. Find other better ways to cheer yourself up.
It could be watching your comfort show, calling a friend, or relaxing in a nice bath.
While retail therapy is often perceived as making impulse buys to cheer yourself up after inconveniences, it could also go the other way around, which is making purchases to “congratulate” yourself. It could look like deciding to order takeout every time you beat a deadline. While it will make you feel good then, it undoubtedly dents your finances.
