Do you ever think you are working hard but never getting ahead financially? It doesn’t depend on the money you make; it just disappears before you invest or save it. If you think the same, no worries, you are not the only one facing this. So many people are struggling with a similar issue and their everyday habits is the culprit. You have no idea how your small behaviors or bad money habits can be harmful that you usually ignore. That small behaviors just drain your wallet silently and it keeps you in the stress of finances.
There are 10 habits that you don’t take seriously but let’s see how you can break them and be financially independent.
1. Living Pay to Pay
You are facing a struggle every month if an unexpected event happens then you don’t have any idea about how you will tackle that situation.
Why it happens?
You spend so much as you earn, and you do not save money for emergencies.
How to break it?
- Start tracking your expenses and income with the budgeting application.
- Follow the 50/30/20 rule: Assign 50% of your pay for your basic needs, 30% to your interests like travel, studies, or anything else, and save 20% of your payment.
- You can automate the transfer of your income like 20% automatically going into your savings account.
2. Ignore Your Debt
The other bad money habit is ignoring your debt as it must be stressful for you. You assume that somehow it will resolve itself.
Why it happens?
Maybe the weight of debt frightened you, so it’s easy for you to ignore rather than confront them.
How to break it?
- List all your debts including minimum payments and interest rates.
- Follow the avalanche method means paying your high-interest debt first or you can also follow the snowball method in which you can pay small-interest debt first for quicker wins.
- Prioritize to pay more than the minimum when it’s feasible.
3. Overspend on Life Upgrades
Every time your pay increases, so do your expenses. You are just stuck in the cycle of lifestyle inflation.
Why it happens?
You are running after the sense of satisfaction by upgrading your lifestyle like wardrobe, watch, home, car, etc. just to compete with your colleagues.
How to break it?
- Whenever you want to buy anything just wait for 30 days to check whether you need it or not.
- Concentrate on what brings you true happiness and just cut out the luxury upgrades.
- Fix the percentage of investments or savings before upgrading your lifestyle.
4. Don’t Make Budget
At the end of the month, constantly you are wondering that where your money is going.
Why it happens?
It is so easy to lose track if you do not make any budget. When you spend without any budget then you spend on your wants rather than needs.
How to break it?
- Make a realistic budget that fits into your financial goals.
- You can use simple spreadsheet for your finance records.
- Review your monthly budget in order to adjust for amendments in expenses or income.
5. Impulse Buying
Usually, you feel regret after purchases, and you feel guilt for spending money on the things that you don’t need.
Why it happens?
Emotional triggers, limited time offers, and sales make it hard for you to resist.
How to break it?
- Make a “no-spend” rule for unnecessary items for some time.
- Follow the 24-hour rule: wait for just 24 hours before buying anything that is not necessary.
- Remember, avoid shopping when you are hungry, bored, and emotional.
6. Depending Too Much on Credit Cards
You have high-interest debt that is continuously growing each month.
Why it happens?
When you don’t have money, credit cards make it easy for you to spend money and the less payment seems manageable.
How to break it?
- Limit the use of your credit cards, only use your credit cards on important purchases that you can pay easily.
- Set your spending alarms to monitor the use of your credit card.
- Prioritize to pay your past loans before using them again.
7. Not Save Money for Emergencies
An unexpected medical bill or repair car makes it difficult for you to manage your finances for the rest of the month.
Why it happens?
You think that emergencies would not happen to you or maybe you assume that you will control it when you have the emergency.
How to break it?
- Make your aim to save at least the income of 3 to 6 months in your emergency funds.
- Make a short-term goal to start your small business by saving $400 to $1200.
- Saving money must be your consistent habit.
8. Fail to Invest
You are skipping the potential financial growth and despite working hard you feel stuck.
Why it happens?
Not having awareness about investing and maybe the fear of risk keeps you on the sidelines.
How to break it?
- Try to start with small investments that could be beginner-friendly.
- Spend some time to educate yourself like you must know the importance of investment.
- Invest your habit even if it’s just a small amount each month.
9. Neglect Financial Education
You don’t have a clue about money management and depend on assumptions to make your financial decisions.
Why it happens?
Our education system doesn’t give us knowledge about money management and making time to learn as an adult may feel overwhelming.
How to break it?
- Read books like Rich Dad Poor Dad by Robert Kiyosaki or The Total Money Makeover by Dave Ramsey.
- Watch YouTube Channels or listen to the podcasts that focus on money management.
- Attend online webinars or free workshops on personal finance.
10. Avoid Financial Planning
You are just living in the moment without any clear plan for your financial future.
Why it happens?
You feel that it is unimportant to plan your financial future when you are looking for your short-term survival.
How to break it?
- Set clear financial goals that must be short-term, mid-term, and long-term.
- Make a proper achievable plan to achieve these goals, it includes timelines, investments, and savings.
- Try to revisit your plans daily to make amendments as needed.
Conclusion
You require discipline and effort to break these bad money habits, but it would be worth it. Just imagine living life without any stress of a loan, having enough money for emergencies, and growing wealth for your future. The first thing you need to do is identify the habits that are stopping you from breaking these money habits, just take small but consistent steps to change them.
You can start the journey of your financial freedom from today. Which one bad money habit you are ready to leave? Let us know in the comments and share this blog with someone who needs a financial wake-up call!
People also showed their interest in:
How to Make Money Online? Step-by-Step Guide
Top 10 Ideas for Side Hustles that You Can Start
