Human beings are often referred to as “creatures of habit”. That is because we enjoy routines, certainty and patterns. Most people pick up a range of habits for everything, including — how they eat, how they they get dressed, how they shower and how they spend money.
Poor financial habits that you may have picked up over a number of years can cause some significant problems.
Here are the 6 most common bad habits when it comes to money and debt.
1) You Ignore Your Finances
Many people ignore their financial problems as long as possible, letting bills mount up, failing to create a budget, showing little spending restraint. Ignoring the problem will not make it go away! At the very least, be aware of how many bills are coming in, how much you are spending and how much you are earning.
2) You Associate Consumption with Happiness
Some people are unsatisfied with their lives. Perhaps they hate their job, their family life isn’t great or they don’t like how they look. One of the most common ways people fill the hole in their life is to get a temporary lift from buying something. A new gadget or piece of clothing can distract a person from the problems in their life. Eventually some people become addicted to consumption. If you have problems in your life, try to address them instead of continually shopping to make yourself feel better.
3) You Don’t Save for the Future
If you have a habit of spending every cent you earn, it’s difficult to build wealth and save for your future. At the very least, you should have an emergency cash fund and a savings account for large purchases you wish to make in coming years. You may not think you want a house when you are twenty, but by the time you are thirty-five and wanting to settle down, you might need a deposit for your home.
4) You Are Competitive About Consumption
If you are the kind of person who wants to be better than their friends or their neighbours, you might feel compelled to spend more money than they do. Try to let go of feelings of jealousy and envy when you see your friends shiny new car. Congratulate them on it, but tell them you are happy with what you have. Enjoy the simple things in life and feelings of envy will disappear (as will your debt).
5) You Only Pay the Minimum Amount
If you get into the habit of paying the least amount possible on your bills, it can spell disaster in the long run. Your credit card bills will increase over time, the amount of interest you pay will continue to increase. That is wasted money. Take the initiative and pay down the principle of your debts.
6) You Confuse “Wants” and “Needs”
If you have a habit of confusing the nature of your purchases, it can be bad news for your finances. Some things are essential to your survival in the modern world — clothing, shelter, food, electricity. However some people begin viewing the latest clothing accessory or flat screen television as somehow being essential to their existence. They are distractions. Really think about what you need to be happy and focus on that.