Bad Financial Habits You Need To Get Rid Of NOW!
KEYWORD PHRASES: Good money habits, good financial habits, financial habits
When renowned American clergymen and historian, Jeremy Belknap, coined the phrase ‘Old habits die hard’, he may not have realised that this applies to every aspect of life including your finances. Most of us struggle through our life longing to be rich. Some of us get there, while others continue wishing for it. The difference between people who become wealthy and those who don’t are their financial habits. People with good financial habits succeed in growing their wealth whereas others end up dealing with their finances carelessly.
Anyone can orient themselves to modify one’s bad financial habits with conscious efforts. But to do this, you need to be aware of your bad financial habits. As the popular saying goes, ‘The first step towards change is awareness’. With awareness, you will be in a better position to employ changes in your financial decision making. To help you get started, we have listed 6 common bad financial habits. Let’s take a look at them one by one.
Using credit cards for the points
Let’s accept one fact that in the world of banking, the motive of every player is to do business. The reward points on your credit card are no doubt helpful for you. But in the long run, it can weigh you down financially. The reward points will act as a catalyst in increasing your overall purchases. Suppose if you were going to buy goods and services worth $100; the reward points will tempt you to expend a lot more than $100. It is, therefore, a bad idea to use credit cards for points. However, if you use the credit card responsibly, then it can have a place in your wallet.
Buying more than you can afford
In the initial phases of your career, it may seem tempting to not live within your means. You might want to be carefree about your expenses as you start using your earnings to buy a better house, car, clothes and so on. There is nothing wrong with wanting a good lifestyle as long as it is within your means. When you buy more than you can afford, you are incurring unnecessary debts. This habit is indeed harmful to your financial health. Imagine if Mr. Lee who earns $60,000 a year spends only $45,000 whereas Mr. John who earns $1,50,000 and spends $1,75,000. Who do you think will be in a better financial position in the long run? It goes without saying that Mr. Lee will have a better financial scenario. He will have lesser chances of going bankrupt in his life. Hence, it is essential to get rid of this bad financial habit.
Ignoring the importance of saving
Most people who are careless with their lifestyle expenditure tend to ignore the importance of saving. If you look at any working professional who has done well for herself, you will see that they were able to grow their wealth only because they started saving money from the very beginning. It is only when you save that you can consider investing your funds and good investments are key to growing rich. Moreover, saving is essential to maintain emergency funds. Life is uncertain and at times, you could be in a situation where you cannot work or are jobless. At such times, your emergency funds should be enough to help you survive for at least 2-3 months. Ideally, you should save up at least 20-25 % of your income every month.
Not budgeting your expenses
A stipulated monthly budget is the financial benchmark you set for yourself. It helps you spend in a limit and allows you to effectively allocate funds in the right places. But most of us either – fail to stick to our budget or simply don’t budget our expenses well enough. This can be detrimental to your finances, especially if you are prone to impulse buying. Without a proper budget, it is difficult to curb your expenses or set reasonable financial goals to grow rich. A monthly or a quarterly financial budget will give you an overview of your expenses and thereby enable you to come with efficient cost-cutting strategies. Budget your expenses is one good habit, you need to start with right away!
Complaining about your paycheck
This might seem as a weird financial habit but constantly complaining about your paycheck can go against your desire to grow rich. Complaining will only add to your misery and marr your ability to grow. Instead, it is wiser to spend the energy to devise ways to help you earn better. If you are being paid less, then maybe you should consider putting in more efforts to get promoted, which in turn will increase your the amount on your paycheck.
These were the a few bad financial habits that have been deterrents to your financial growth. Work conscientiously to get rid of them and nothing will stop you from growing rich.
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