Old habits die hard, but when it comes to bad money habits, they need to be dropped ASAP because they can prevent you from reaching your financial goals and set you up for failure.
If you find yourself with no savings and spending more money than you earn, you have many nasty money habits that you need to drop.
Credit Card Debts
It’s easy to buy that luxury handbag you’ve been eyeing when you know you have your credit card fitted snugly in your bag. Racking up credit card debt is one of the most expensive bad money habits you can have.
Asides from leaving you in debt later, having high balances on your credit cards can also damage your credit score.
Saving Absolutely Nothing
If you have no single penny to your name this December, your first financial priority in 2022 is to build savings and an emergency fund.
Set aside a percentage of your income every month and do not touch it. Set another percentage aside and do not touch that too except there is an emergency. Oh, by the way, a quick trip to the cinemas with the girls does not count as an emergency.
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Living Without A Budget
This is a terrible habit you should drop right away!
When you spend without a plan, you don’t get the most value from your money and it can be hard to determine if you’re overspending.
You either make a detailed budget or opt for a simple 50/30/20 approach. In 2022, you should never be caught spending money you have no plan for.
Being An Overspender
Do you change your phone every six months? Or buy brand new cars every 3 years? Or almost never eat in?
Many times, we see financial indulgences as necessities rather than as luxuries that could be cut to accomplish financial goals.
When you make a budget, track your spending first to identify the problem areas — big and small. Go ahead to look at the numbers with a fresh eye so you can give careful consideration to whether a particular expense actually makes sense.
Impulse buying is another damaging habit, and it’s one a lot of people indulge in without even thinking about it. It’s easy to throw a few extra items in the grocery cart or click through and buy that dress on amazon.
Once you take steps to cut impulse items, you’d be surprised to find just how much extra money you actually free up.
Of course, breaking bad habits and starting new ones doesn’t happen overnight. However, with persistence and know-how, you can start transitioning to better money habits.