A habit is a routine of behavior that is repeated regularly and tends to occur subconsciously. The regular tendencies we have that are hard to break. They are the things we do over and over .The American Journal of Psychology (1903) defines a “habit, from the standpoint of psychology, as a more or less fixed way of thinking, willing, or feeling acquired through previous repetition of a mental experience.
When it comes to breaking bad money habits, it can sometimes be easier to replace those bad habits with new, good ones. Just take it down to the basics – live within your means, avoid consumer debt and save for the future. If you can accomplish those three things you’ll be in a good place.
No matter what area of your life you’re trying to improve there needs to be a sharp focus on breaking bad habits and forming good ones. Such habits that diminish attainment of you financial goals are as enumerated below.
Spending More Than You Earn
Spending more than you earn is THE cardinal sin of personal finance. This one habit will have a trickle-down effect, causing big problems in all areas of your personal finances.
For instance, if you spend more than you earn you’ll have to rely on credit to cover the rest. The credit comes with interest and traps you into debt. You continue spending more than you earn creating a bigger, more vicious cycle.
If you currently spend more than you earn this needs to be the very first thing you address. Don’t even worry about anything else until you’re living within your means.
Relying on credit to pay bills
Credit is expensive and if not used properly is a trap! If you’re using credit to cover basic things like food or rent or are using it for mindless purchases (like a vacation or new clothes) you need to remedy the situation.
While it’s true that at some point you might need to rely on debt – say, for a mortgage, education expenses or an investment property – it should be done with extreme care and planning. Do not use credit cards or any other form of debt to cover your bills.
Taking out payday loans – ever
Talking of debt, payday loans are one of the worst forms of it. Here’s a story to illustrate:
I had a friend who once decided to take out a payday loan to pay for vacation. When she got back from vacation the following week she was supposed to repay the loan. Not having enough money she went to another payday loan lender and took out a loan to pay back the first lender. She repeated this cycle for MONTHS until her Dad or mum finally bailed her out.
If you currently take out payday loans you need to break this habit now. The interest is not worth it. There are S
Not being prepared for an emergency
If there’s one thing you can count on it’s that at some point or another something will go wrong. An accident will happen, a job will be lost or an appliance will break. Being prepared for an emergency is very important when it comes to your finances.
You don’t want to be caught off guard, financially anyway. Save up some cash for emergencies.
Paying your bills late
Paying your bills late – it’s a bad habit to have but happens to even the best of us. When you pay your bills late your credit score takes a hit and you could cost yourself more money in late fees and interest charges.
Make it a habit of always paying your bills on time. If you’re the type of person who simply procrastinates with tasks like this consider enrolling in auto-pay.
It also means you probably need to get financially organized. Check out this guide on how to organize your finances so that you don’t miss another bill again!
Failing to save for the future
When it comes to money there needs to be balance. Living big and Shouting at the top of your lungs won’t magically make you have a great life in retirement or help you build wealth. Enjoy life now but also be sure to save for the future and diligently work towards your goals.
Blaming others for your circumstances
“Life isn’t fair.” It’s a phrase we’ve all heard before and one we’ve likely said to ourselves. And it’s completely, 100% true. We’ve all been born into different circumstances, some of us having many more opportunities than others.
While “life isn’t fair” is true, blaming other people isn’t going to help you – at all! Accept where you’re at and play the cards you’ve been given. Only compare yourself to yourself.
Hoarding money and never having fun
On the opposite end of going into debt and spending too much is being afraid to spend anything! If you’ve been hoarding money to the point of misery it’s time to break that habit. Lighten up on yourself a bit and enjoy the money you’ve worked hard for.
“If you don’t like how things are, change it! You are not a tree.” – Jim Rohn
Don’t let excuses hold you back. You have the choice to work hard and build the life (and finances) you want or to make excuses. Choose wisely.