Every person struggles with bad money habits or impulses with their finances. Even the most skilled investors and most affluent financial gurus struggle with financial temptations at times and many have dug themselves out of the cellar that poor spending habits got them into. Learning to break bad money habits is part of our growth as human beings. Some people learn in their twenties, some in their fifties, and some people never learn the importance of spending wisely. Factum Financial wealth strategists focus on growing in financial wisdom with the families and businesses we serve. A big part of fiscal wisdom is practicing good habits when it comes to our finances. Here are some habits you can work on breaking now to set you up for the future.
Spending Outside Your Means
This is one of the worst habits that you need to break now! Spending more money than you earn is absolutely one of the worst habits you can have and sets you up for failure every time. This can rob your future paychecks of money that you may need in the future, force you to pay bills on credit, or even cause you to skip payments and take a huge hit on your credit. If you spend beyond your paychecks, the first bad habit you need to get under control is living outside your means. Cut spending where you can and pick up a side job, like driving for a rideshare company such as Uber or Lyft to increase the money you intake every month.
Paying Bills On Credit
This is essentially allowing yourself to continue falling deeper in debt. Sometimes it’s unavoidable, but you should try not to make a habit of paying bills on credit and worrying about dealing with the credit cards later. Credit cards have high interest rates and compound consistently so you will actually spend more in the long run when you pay on credit. Pay your bills upfront and give yourself enough leeway to handle their impact on your finances.
Paying Bills Late
Paying bills late is a bad habit for two reasons. First, when you pay your bills late it affects your credit score, making it harder to secure loans or apply for great apartments and other things in the future. Second, late fees and interest get tacked on to late payments, making it even harder to pay those bills in the long run. If you choose not to pay certain bills on time, you probably need a more stringent budget and some discipline to make sure your bills are all paid on time. If it’s a matter of forgetfulness, most banks have a great autopay system that will make sure you are current and on time every month.
Poor Savings Habits
Whether it’s an emergency savings fund or saving for a vacation, proper savings habits are actually crucial to your financial health. Poor savings habits can actually cost you more down the line when an emergency hits that you might need to cover with credit or when the opportunity to make an investment or purchase something that you value comes along, but you have limited funds. Break the bad habit of poor savings now by putting away at least a portion of your paycheck. Most people subscribe to the 50/30/20 rule, where 50% of your income goes to necessities, 30% goes to discretionary spending, and 20% goes toward savings. Even saving a little is better than saving nothing at all.
Impulse buying is one of many bad money habits that almost everyone falls into now and again. Perhaps it’s an overpriced snack at the gas station, a “great” sale on a new appliance that you can’t pass up, or any other purchase that you think you need this minute but don’t actually need. These types of purchases are the ones that eat up your paycheck, causing you to look back at the end of a pay period and wonder where all your money has gone. When you are making a purchasing decision, particularly on big purchases, don’t buy on impulse. Take some time to think about whether you need it immediately or if the purchase can wait. Some people choose to wait a day and some people choose to wait a month. Whatever amount of time allows you to make a sound decision and break bad money habits.
Breaking bad money habits is one way to watch over your financial health, but much like breaking bad physical habits can be reinforced by going to the gym, exercising, or eating a healthy diet, striking out on a new financial path will help you grow in wisdom and in wealth.
Consider contacting the wealth advisor team at Factum Financial today. We can show you the tools and give you the guidance you need to radically shift the way that you save and spend your money and you can set a course for financial solidarity and peace that will last a lifetime. Call or contact one of our wealth strategists now at 480-525-8180 for more information.
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