Bad money habits can leave you broke. You might be earning a handsome amount each year but somehow end up being unsatisfied in the end.
Certain habits will keep adding hurdles to your financial growth and might even hinder it. No matter how hard you work, if you don’t overcome these money habits, you are soon going to find yourself strapped.
Here are 7 money habits that you should get rid of once and for all:
1.Not tracking your expenses:
This one is less common but if you are one of those who don’t track their expenses monthly/weekly then you are allowing your money to slip from your hands like water.
Tracking expenses is important, while it may seem like a lot of work to regularly fill in those spreadsheets, it is crucial to keep a check on your spending. Not only does it help you know where your money is going, but it also forces you to keep the splurge within the budget.
You can easily compare your previous month’s budget and your current monthly budget and see where you could have reduced your expenses.
When you don’t track your expenses, you won’t be able to rationally meet your financial objectives. You might be spending more on food and fun than you actually should be and less on more important things like yourself or your business.
2. Buying things for status:
Don’t be a status-seeker. Buying things just so you could show off isn’t the most logical thing to do with all the hard-earned money.
It is alright to improve your living condition, to enhance your standards but that should be done in a way that along with improving your status, also helps to bring an upward spike in your finances.
You cannot just go with buying all those expensive items with the same income level and expect your standards to improve, you are just opening more doors for yourself that lead towards getting broke.
This trend of buying things just so you can show people a glimpse of your bank balance not only affects your wallet but also your mental health.
The thing that you purchased might not even hold any such value or importance but you still buy it because everyone else is doing so.
But suppose if someday you are not in the position to purchase any of that, who knows, you might end up taking a loan just for the sake of maintaining that position in society. And that’s how most of the celebs end up being broke even after earning millions through their work.
3. Not having a financial plan:
A financial plan helps you form portions of money that will be used in a particular manner.
I read somewhere that you should only spend half of the money you earn. 25% of the remaining should be invested into valuable things such as stocks or your business which will help you increase your income level and the other 25% should be kept for emergencies.
Such a plan can help you cope up with an uncertain future and also help you grow financially. In this manner, along with providing yourself financial security, you are also controlling your spending.
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4. The ‘retail therapy trap:
Don’t let retail therapy become your ‘new addiction’.
Getting bored at midnight and you end up purchasing something irrelevant from the Amazon store thinking that the ostrich pillow might help you get better sleep.
No, it isn’t going to do any good because your expenses at the end of the month won’t let you sleep peacefully.
Shopping sure reduces stress, but this shouldn’t go too far if you are trying to improve your budget.
Retail therapy isn’t a problem if done in moderate doses but it becomes a problem when the consequences prevent you from paying your bills on time or feeling guilty for purchasing something.
Most of the time you are going to get into trouble when you start handling your finances using the steering wheels of emotions. The least you could do is to know what triggers this behavior and prevent yourself from getting affected by them from the next time onwards.
5. Surviving on a single source of income:
Just like you don’t have one bill to pay, you cannot just survive with one source of income. In order to become rich, you need to have multiple sources of income.
One can be your active source, like the business that you run and the rest of them can be your passive sources of income, like stocks or investment in your friend’s business.
Your passive sources don’t need much of your attention in the future course of time and will keep providing you funds.
You cannot just rely on one single source of income these days. To reach your financial goal, you need to have multiple sources of income rather than just waiting for your boss to give you a raise.
6. An unfit lifestyle:
Spending unnecessary money on things that are only harming you in return is foolish. If you are one of those who are addicted to smoking, drinking or even consuming fast food in an unhealthy amount then it’s high time that you take an action to control your blows on such things.
Such things not only harm your body but also reduce your productivity and forms a major part of your budget. Consuming unhealthy things reduces your productivity and will make you less able to work hard.
7. Spending and Saving cycle:
This is a common mistake that many people make. They spend first and put the remaining into savings. What you should be doing is; keeping aside the money into savings and then spending the remaining according to your needs.
It shouldn’t be spending and saving cycle, rather a saving and spending cycle. You first save and then spend.
Good money habits are supreme for financial success. It will make you less vulnerable to the many financial problems and help you make better decisions.
I hope you enjoyed reading this article!
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