Bad money habits are something we develop or are taught. But no matter where we get them, bad money habits hinder you from reaching your financial goals. They are the reason you will always be further from the life you envision. Certain toxic money habits keep middle-class Americans from retiring when they want to.
If you want to achieve your goals, start by identifying the money habits that are holding you back and working on changing 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 cause you to pay high interest fees, which will basically wreck 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 are you 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.