10 Money Habits You Need to Quit
Sometimes in order to be more financially sound we need to “get out of our own way.” In our last article we showed you how to create a budget you can live with. In this article, you will read about 10 bad money habits that you need to quit in order to be more financially savvy.
Buying things without having a budget
One of the biggest mistakes that many people make is not having a budget. When you don’t know how much you have coming in or going out, it is easy to get into murky financial waters. I highly recommend taking the time to sit down and figure out your monthly income and expenses. Then make a plan for how you can most efficiently use your income to cover all of your expenses.
Only having a checking account
Another common mistake that people make is not having some type of savings account or rainy day fund. Having “extra” money at your disposal is always a good thing because you never know when you will need it for something important. Instead of spending all of your money each month, make a plan to set a certain amount or percentage aside.
Only paying the minimum on your credit card balance
Just because credit card companies only require you to pay a minimum amount each month doesn’t mean that you are not allowed to pay more. A good practice is to pay off your balance in full as soon as you can. This improves your credit and helps you avoid paying a lot of extra money in interest.
Waiting until you accrue late fees to pay bills
If you constantly wait until your bill is past due to pay your bills, you are essentially throwing away money. The few dollars here and there can easily add up to hundreds each year. Keep that money in your pocket by paying your bills as soon as you receive them.
Swiping your debit/credit card for all purchases
There is no denying that debit/credit cards come in handy – especially when so many companies allow you to pay your bills online. However, studies have shown that people spend 12-18% more money when they use a debit/credit card than when they pay with cash. I recommend utilizing the “envelope system” by withdrawing the amount of cash you need to get through the month and reserving credit/debit card purchases for online transactions.
Buying the first thing you see
When you need to make a purchase, you should get into the habit of shopping around a bit before making a decision. You might be able to find much better prices that way, thus saving yourself some money.
Buying and paying for things you don’t really need
Have you ever bought something and then later regretted it? I can almost guarantee the answer is yes. Before you make a purchase, ask yourself if it is a necessity or if you can go without it. I would also look at the things you pay for on a monthly basis and decide if there is anything that you don’t really need or use. If it is not essential, save that money for something else.
Paying retail price for everything
These days, there are a ton of ways to save money while shopping. I am constantly on the lookout for coupons and sales. You can even download apps that provide you with digital coupons so that you don’t have to clip them or remember to bring them to the store. Although not everything will have a coupon or go on sale, you can definitely save money on some things.
Some of our favorite apps include:
Our favorite coupon sites:
Shopping as a form of entertainment or stress relief
If you shop as a way to reward yourself or take your mind off something, you might want to consider another method. Instead of shopping, find another reward or hobby that makes you feel good. You might be surprised by how much money you save as a result.
Failing to have a retirement fund
Last, but not least, if you have not given some thought to your financial future, you should start doing that now. Many people have to work beyond retirement age or depend on others for their livelihood because they didn’t have enough money set aside. By planning and saving now, you help to ensure that you will be ok when that time comes.
Read part 1 of our Budget Series.