8 Bad Money Habits and How to Break Them
Managing your hard-earned money is directly linked to what habits you maintain. Let’s say, you have a habit of doing an excess of online shopping. So, that’s where most of your money is likely to go. In the similar fashion, your money habits decide how good or bad you are at managing money.
Here are some bad money habits that you need to look at right now.
1. Earning less, spending more: This is one of those bad money habits that hit you the most. You run up spending more money than you can add up from all your sources. If the money you are spending exceeds what you earn, BEWARE! You are overspending.
How to Break: Have a look at your bad spending habits. Separate them into two categories based on want and need. Cut out what’s not needed. It is better if you prepare a monthly budget and follow it regularly.
Other than that you can try to increase your sources of income in case you are running hard on credit card bills and can’t avoid them
2. Don’t procrastinate about your financial decisions: Tomorrow never comes. You keep on postponing your crucial financial decisions for tomorrow which never came. Stop procrastinating and start taking actions today. It is bad to make a bad financial decision but it’s even worse to postpone the good ones. Procrastination can develop many bad money habits.
How to break: Invest most of your money when you have got it. The more delay there is an investment, the less money you have to invest.
3. Focus on wants rather than needs: Perception is a deceptive thing. Sometimes just to remain a step ahead than others, you spend money on things that are driven by our ego. They fall into the category of bad money habits that often put you in unwanted debt.
How to Break: You can go for debt in case of strategic and purposeful needs but not to fund your lavish lifestyle.
4. Taking risks rather than strategic investment: Many people like to go up and down in the stock market without fully knowing what they are getting into. But if you are putting your money on the line for things that you don’t fully understand, then you are gambling rather than investing.
How to break: make strategic investments (don’t measure the depth of the pool after jumping into it). Don’t go for shortcuts and try to avoid your bad spending habits.
5. Not in a habit of saving regularly: As we pointed out, our savings are dependent on our money spending habits. Generally, people do not have a plan for spending money and that makes savings fuzz in the air.
How to break: Set aside a particular amount for monthly savings and the plan your expenses on what’s left. This will change your bad money habits into savings habit.
6. Don’t take too much risk: You often shy away from an investment that involves slightly higher risks but can provide greater returns. It’s the risk aversion that is holding you back from taking risks and falls under the category of bad money habits.
How to break: You must try to understand the risks than avoiding it. Take help of expert investors who can give you a maximum guarantee of returns but don’t let it go because of your lack of knowledge.
7. Avoid pushing the due date: Late payments have an adverse effect on your credit card scores and can prevent you from getting further credits. Credit card interests can soon pile up and take a heavy toll on your pocket.
How to break: Paying bills on time can save you against potential late payment charges. Go for auto debits and make sure they don’t go void.
8. Having bad money habits that are financially taxing: Bad money habits like smoking, drinking and taking outings too often can increase your financial burden. These expenses don’t seem to be too much but in due course of time, they add up to significant amounts.
How to break: If you have bad money habits that can be potentially hazardous to your health, then better avoid it. Apart from your money, it’s your health which is at the maximum risk.
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