Walking Away from Bad Money Habits

Bad money habits… Many people suffer from them and are trying to break free, but some do not even realize there is a problem they should be addressing. It is common knowledge that if you spend irresponsibly, it is only a matter of time before you go broke. Yet, many still fall into that trap without realizing it.

They are not even a one-way street—there are many ways they manifest. If you do not recognize them, you may always think it is your village people who are after your finances. You will do this comfortably, eating a mouthful of the shawarma you bought while saying, "If I perish, I perish." So, before we discuss solutions to these habits, let us identify them so you can clearly understand what you are up against.

Common Bad Money Habits

• Impulse Spending: When speaking of bad money habits, impulse spending usually comes to people's minds first. It means buying or spending money on something without planning to do so or even considering the cost. Many people have financial goals, but those get thrown out the window when they see a promo deal or flash sale they consider a good buy. Impulse buying can range from purchasing an extra cup of coffee you do not need to taking a last-minute trip you did not plan.

PS: Retail therapy also counts as impulse spending.

• Living from Paycheck to Paycheck: You might glance at this and wonder what is wrong with it—but everything is. It is not okay to live completely dependent on each paycheck, spending all your salary without putting anything aside and then waiting for the next one to get through the month. What happens if your next paycheck is late? Then you find yourself looking for where to borrow money to survive.
• Lack of Budgeting and Financial Planning: Some people do not budget. Some budget in their heads and constantly deviate from it. Others know they need a financial plan but avoid it out of discomfort or fear. Well, let's hope that the fear of going broke outweighs the fear of planning, because that is what will happen if you refuse to budget. You might believe you have more money than you do, leading you to spend beyond your means on things that are not important.

Now that we have highlighted some of the most common bad money habits, we are sure you can recognize the ones you struggle with. Let us now share some strategies that can help you break free from these stubborn habits:

Strategies to Break Free from Bad Money Habits

• Awareness and Accountability: Now that you know what you are battling, you cannot afford slip-ups. You must set financial goals that you are keen on reaching. Make them realistic but not too comfortable. To stay on track, get an accountability buddy who can support you on your journey and help you monitor your spending.
• Create a Budget and Stick to It: It is easy to write down a budget, but sticking to it requires discipline. There is a rule called the 50/30/20 rule that helps with budgeting:
  • 50% of your earnings for needs,
  • 30% for wants, and
  • 20% for savings.
  To ensure you do not dip into your savings, use saving apps and automate withdrawals for your designated savings amount each month.
• Saving and Investing is a Must: When saving and investing become an essential part of your financial journey, you will realize you have less to spend impulsively. Aside from saving, you should start learning about investment opportunities that suit you. You do not have to look far—at Credlanche, we provide all the materials you need to begin your investment journey. Not only do we help you start, but we also track your progress with plans tailored to your needs and risk level.
• Develop Smart Spending Habits: One way to combat bad habits is to cultivate better ones, and this applies to spending as well. For example, waiting a full day before making a purchase gives you time to consider whether you truly need it. Other good habits include distinguishing between needs and wants before making a purchase, setting milestone rewards within budget when you achieve a goal, and avoiding frequent splurging. You can come up with other habits that work for you.

Once you have identified your bad money habit(s), it becomes easier to combat them. While working to improve, ensure you track your progress. For example, keep records of your savings and investments to see how far you have come. With Credlanche handling your investment portfolio, you will be amazed at how much you can achieve in a short time.