4 Bad Money Habits to Break ASAP (and How to Make the Change)

4 Bad Money Habits to Break ASAP (and How to Make the Change)It

Not everyone is great with money. Fortunately, it’s possible to change! If you’ve found yourself falling victim to some bad money habits recently, keep reading. We’ve listed four not-so-great money habits below and we’ve laid out what you can do about them. Armed with this knowledge, you should have a much better idea of what it takes to get back in control of your finances.

These four bad money habits are common, but you don’t have to deal with them forever. Here’s what you need to know:

1. Spending more than you earn.

Unfortunately, spending more than you earn is one of the most common personal finance mistakes — and it’s one of the most problematic. Put simply, when you spend more money than you bring in each month, you have to rely on credit cards to make up the deficit. Over time, interest charges start to add up and you can find yourself deeper in a financial hole than you were when you started.

How to break the habit:

If you don’t have enough money to make ends meet, there are two things you can do to make a change. On the one hand, you can cut down on your expenses. On the other, you can also try to start earning more money.

For many, tracking your expenses is the easiest place to start. There are plenty of budgeting apps out there that will help you keep track of where you spend your money. Once you’ve tracked your expenses for a week or two, take a long, hard look at where the money is going and do your best to cut out the bulk of your unnecessary spending.

That said, if you’re not making much, it may be wiser to focus on bringing in more income. Luckily, these days, there are plenty of part-time jobs and side hustles that may be able to help you bring in some extra cash.

2. Avoiding paying your bills.

Once you’ve got your spending under control, the next step is to focus on paying your bills on time. Unfortunately, overdue bills can have a drastic impact on your finances. Payment history accounts for roughly 35% of your overall credit score, which means that missing even one bill can harm your score overall. If that bill goes to collection, it will have an even larger impact. Not to mention that you will keep racking up late fees the entire time that the bill is overdue.

How to break the habit:

In this instance, reminders are key. Put them on your phone; put them on your calendar; put them everywhere.

If you’re the sort of person that ignores your own reminders, consider putting your bills on auto-pay. Just be sure to set the payment dates so that you don’t accidentally overdraft your account.

3. Racking up credit card debt.

While it’s true that sometimes you may need to rely on financing to cover a big purchase, such as a car loan or a mortgage, these situations should be handled with proper care and planning. If, on the other hand, you are relying on credit cards to cover basic expenses or finance unnecessary purchases and you’ve created a situation where you’re racking up debt regularly, that’s when it becomes a problem.

How to break the habit:

The first step is to stop using your credit cards. Using debit or cash will help you become more cognizant of your spending and will also help you to stop creating new debt. Then, it’s time to get a sense of how much debt you’re truly dealing with at the moment. After you have a handle on the total, you’ll need to start thinking about how to consolidate your debt or using a debt payoff method to pay down your balances over time.

4. Forgetting to save for an emergency.

Lastly, if you haven’t yet saved up money in an emergency fund, you should do so as soon as possible. While life is unpredictable, there is one assurance — at some point, you will have a financial emergency and you’re going to want to be prepared for when that day comes along. Otherwise, you could find yourself scrambling to figure out how to cover the necessary expenses.

How to break the habit:

Conventional wisdom states that you should have at least three-to-six months worth of expenses in an emergency fund and any given time. If you haven’t saved up that much yet, now is the time to start. Take a look at your budget to see how much you can put aside. Then, do so consistently until you’ve reached your target amount of savings.

The bottom line on these bad money habits

At the end of the day, no one is perfect and changing bad habits takes time. While you may find that you’re not able to make these changes perfectly at first, keep trying. Over time, they’ll likely become easier to adopt and you’ll begin to see yourself making progress.

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