Having the right habits towards money ensures your financial freedom in future. The wrong money habits will ruin your finances and constantly leave you in a bad place financially. Here are 7 bad money habits and ways to solve them;
Bad Money Habits And Ways To Break Them
1. Spending More Than You Earn
The biggest mistake you can make with your money is spending more than you earn. This habit will cause big problems in future if not sorted out early.
If you spend more than you earn, you will constantly be broke and have to rely on borrowing to survive. The more you borrow, the more debt you accumulate. To be financially successful, you need to learn to spend within your means.
To break this habit, you learn to cut your spending, budget better, and never spend without checking your budget first. Also, you can decide to get a side hustle to help support your lifestyle.
2. Spending Before You Earn
This is one mistake many individuals make that have severe repercussions in future. You see something ton want and you take out a payday loan or buy on credit because you haven’t gotten paid yet. The more you do this, the more used to this habit you get and you will never be in control of your finances.
To break this habit, you need to consciously make an effort to never buy anything you do not immediately have money for. Make it a point to stick to your budget and stop spending once you reach the limit for that category on your budget.
Read Also: 7 Ways To Stop Spending Your Savings
3. Paying Bills/Debts Late
Paying bills late is a bad habit that most of us have. It stems from procrastination and sometimes has a penalty attached to it. For debts, the later you pay, the more interest you will have to pay on your money.
To break this habit, you first have to deal break your habit of procrastination. Next, set automated payments for every recurrent bill you have to settle. For debts, you can set up reminders to constantly keep track of payment days.
4. Undisciplined Savings
Having savings is great but you need to do it consistently for it to matter. If you don’t take your savings out of your income before you start to spend it, you will most likely not do it anymore.
Also, savings without a purpose is one mistake many people make. You need to have clear cut goals in mind for every saving you make. Be it for investments, buying something, executing a project, and so on.
To sort this out, you need to have different savings accounts for various targets. Also, set up automatic savings on your mobile banking app, like PiggyVest, to help you keep your savings consistent.
5. Not Being Prepared for an Emergency or Saving For The Future
Emergencies happen when you least expect them and are least prepared for them. If you haven’t built an emergency fund, this could negatively affect your budget for years to come. A lack of emergency funds can put you in a very difficult financial situation.
Also, you will want to do lots of things in the future. From buying a house to paying your children’s school fees and even retirement. To be able to scale through these effortlessly, you need to have savings to back you up.
To break this habit, firstly, automate your savings. Next, look for ways to trim unnecessary spending and cancel unused subscriptions. Also, be intentional about focusing on your retirement funds to save you stress in the future.
6. Not Having A Budget
A budget is very important for financial growth and freedom. If you don’t have a budget, or you have one you don’t follow, your financial needs will not be met. A budget serves as a map to your financial future and points you in the right direction.
If you don’t have a budget, you need to get one immediately. To break this habit, you need to have a grasp of what your finances are like so you can know how to apportion funds. Also, set long-term and short-term financial goals and monitor your spending.
7. Hoarding Money and Not Having Fun
On the opposite end of spending too much and going into debt is not spending money at all. If you’re hoarding money to the point of misery, it’s time to break the habit.
To break this habit, you need to make a conscious effort to go out and have fun. Lighten up and enjoy the money you worked so hard for.
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