Breaking bad money habits is the same as breaking any other habit. It pays to assess your behaviour and give yourself a gentle nudge towards change – for your hip pocket’s sake. Which of these habits do you need to break?
Spending small money on temptations
Many people spend money on small luxuries – I’m talking about your daily cappuccino, the chocolate bar you throw in at the checkout or an impulsive fast-food purchase on the way home. Money-savvy people tend to avoid these impulsive purchases. Try tracking your expenses for a month and add it up at the end, then multiply it by 12. Once you realise how much money you spend, you might think twice.
Settling for the first option
When it comes to buying groceries, eating out and spending on entertainment experiences, one thing good savers do is shop around for the cheaper options. While there’s no harm in splashing out occasionally, it’s good practice not to settle for the expensive option just because it’s convenient. Getting into the habit of researching cheaper alternatives will make splashing out on something expensive more special.
Saving without a goal
If you’re committed to saving money, you’re already off to a great start. One way to give your savings an extra boost is to set goals on what you’d eventually wish to spend it– whether that’s your Christmas spending money or reducing your mortgage. One thing is certain, setting yourself target amounts and budgeting to meet them will see you reach your goals much more quickly.
Not saving for a rainy day
It’s financially prudent for everyone to have an emergency fund for those unexpected moments when things go wrong. Imagine that you have to have extensive dental work done or your beloved dog needs emergency vet care. Start depositing a small amount each week and forbid yourself from touching those savings. Small, regular amounts can really add up in no time.
Not paying off your credit card
We all know that credit cards can trick us into spending what we don’t have. But they don’t need to have that power over us. Credit cards can be very useful – as long as you pay them off in full every month. This way, you can also have the chance to collect points or cash back bonuses without having to pay interest. Another option is to cancel unnecessary credit cards altogether and switch to debit cards – so you’re only spending what you have.
What other money habits do you need to break?