5 Bad Money Habits and how to Overcome them
Some people earn a good living, but still struggle to get by. Just because they earn three or four times the average salary doesn’t mean they don’t struggle with their household spending.
It is simply bad money habits, or spending habits, that are the reason for the ongoing struggle. Maintaining an expensive lifestyle that is actually beyond their means is the core issue, but there are habits that have to be managed to fix it.
Here are the 5 bad money habits that need to be controlled, in order for you to take control.
Not saving regularly. Whether that is into an emergency cash fund, or KiwiSaver, or another medium to long term plan, and savings are good for you. Apart from giving you the freedom to make different lifestyle choices in the future, a regular savings strategy is the number one habit to make sure you are beginning to live within your means..
Buying things you don’t actually need. How much do you throw out of the house when the inorganic rubbish collection is being announced? How much of your stuff ends up on TradeMe? It is not just a self-control issue, though that is often part of the problem. It happens because there is a lack of clear goals, or planning. You know when you really want something that IS important to you that it becomes very easy to walk past things that are “on sale”, or have a momentary appeal....you instantly make a trade off mentally – “I won’t buy that because it will slow me down on getting what I really want. Buying stuff you later question is really a sign that you need to set some goals that motivate you to change behaviour.
Making minimum payments on credit cards. A big trap for the unwary....paying interest only, at exorbitant rates. A credit card is actually a great way to manage your planned purchases - stuff that you can already afford - so you can take earn rewards like cashback or air miles. But if you neglect to pay your credit card bills when they’re due, you’ll be charged fees and interest at ridiculous levels. It is one of the most expensive forms of debt there is. Avoid purchasing “stuff” on your credit cards that are outside your budget (see Point 2 above).
Over-drafting on your day to day bank accounts. Floating mortgages are a great concept – if you are in control of your spending. If you aren’t you will be paying relatively high interest on “stuff” again, and never progressing the debt repayment. If you are actually using an overdraft, then there can be some pretty high charges and interest rates associated with them..
Silly subscription plans. Excessive home TV subscriptions, cellphone/data plans, magazines that rarely ever get read.....gymnasium memberships....there are any number of things that people pay subscriptions for as the cost seems relatively low, but which they then barely or rarely use. Get rid of the subscriptions that you are simply not getting full value from.
Focus on mastering these 5 bad habits, and you will be well on the road to financial success.
Want balance in your life, ensuring you have the right amount of everything? Share your hopes and dreams. Plan your future and let me help you make sure you have peace of mind along the way.
Amy Callon
Financial Adviser
New Vision Financial Services
Plan your future and let us help you have peace of mind along the way.