Our financial wellbeing has never been more important. Especially, in a world where it seems like everything is stacked against you, what with house prices and the cost of living. But with so much pressure on our financial health, it is no surprise that many of us fall victim to some of the biggest money mistakes. In this post, I aim to shed light on the top 8 Bad Money Habits you Need to Break this Year.
It is my hope that by identifying your bad money habits, you can then use some of our practical tips to break free from them and commit to a brighter and healthier financial future.
Not only should you start saving more money everyday, but you should feel more confident with your finances and more ready for whatever your future holds.
Impulse Buying
Impulse buying is probably the worst money habit you can pick up. And it is so easy to fall into! We have all been near the checkout and been tempted by a special offer. Or perhaps you are online shopping and you think you might as well order something else because you have to pay postage anyway.
But the biggest culprit of all when it comes to impulse buying is emotions! When you have had a bad day….Treat yourself! When you have achieved something…Treat yourself! It is just so easy to spend without really thinking about it!
Impulse buying is such a big problem that I have dedicated a whole post to it, where I discuss my experience with it and how I overcame the shopping addiction that my impulse buying created. Discover the 7 Tips you need to Stop Impulse Buying Today!
If I had to give you one single tip that helps impulse buying more than anything it would be the 30 day purchase method. When you want to buy something (that is not a “need”) then you must wait 30 days before you can buy it. After 30 days you probably won’t feel like you need it anymore. And if you do still want it then you know it is worth it and that you won’t regret your purchase.
You don’t have a Budget
Nothing ruins your finances quicker than not having a proper budget. Of all the bad money habits we are covering I think this is the one that most people are guilty of. You may think a budget is unnecessary but being able to know exactly where your money is going, and more importantly, where it shouldbe going is invaluable.
If you are new to budgeting then simply start by going into your bank account and noting down all of your incomings against all of your outgoings. From there you can further break down your outgoings into “needs” and “wants”.
Your “needs” can include categories such as mortgage/rent, food, fuel, car etc. And your “wants” will include everything else that weren’t technically “necessary”. For me this would be things such as makeup, dining out and presents for others.
Set the categories based on your personal spending habits. Once you can see where your money is going you can then decide if you want to set a limit for certain categories. Essentially “setting your budget” for the month ahead.
Being conscious of where your money is going will help you make more informed spending decisions, and should help you cut down on those pesky impulse purchases that we are all guilty of.
Accumulating Credit Card Debt
Credit cards are convenient. Just tap, go and worry about paying for it later. But if you are just paying off the minimum amount required then you could end up owing some serious interest.
In order to avoid extra costs and getting into the dreaded credit card debt, you need to get into the habit of paying off your bills in full. If you can’t afford to pay off your bill in full then really you shouldn’t be spending that much to start with!
If it is a battle to pay off your credit card bill then I would highly recommend limiting your credit card usage and trying to only use the money you have, as much as you can.
You don’t have an Emergency Fund
If you haven’t started an Emergency fund yet then you are living dangerously!
When you are hit by unexpected expenses, it can cause major financial stress and could push you into debt. If your car broke down, or your washing machine flooded the house, how much financial stress would you be under?
Making an Emergency fund means regularly contributing to a savings pot for months or even years until you feel like you can cover whatever emergency could come your way.
Many people decide to save a few month’s worth of household bills, just in case you are left in a situation where you can’t work or earn for a while.
Having a separate pot of money just for emergencies is a great way of avoiding any unnecessary stress and is sure to instantly improve your finances.
If you are still not convinced that you need an emergency fund, make sure to check out my post about Why you need an Emergency Fund and How to Save One. We take a deep dive into emergency funds, how to save for them even on low-income and why they are the best way to secure your financial future.
Buying Now thinking Later
It is very easy for the bills to start piling up before you even realise. And this doesn’t even have to be from impulse purchases! A couple of dinners with friends and family, a takeaway coffee here and there and then a new phone because yours broke and soon you have spent hundreds if not thousands without even thinking about it!
As much as you should have fun and live your life, thinking about what you are spending first really should become a habit. Otherwise you could find yourself in financial trouble before you know it!
When you are trying to balance a thriving social life with saving for your future, it can be very difficult. But being able to identify when you are favouring instant gratification over long term goals means you can adjust your decisions and prioritise when you need to.
Finding a balance between living and saving can be tricky. Just make sure you stop to think about everything first and you should be ok!
Not Investing or Saving any Money
If you are not saving or investing yet then you are seriously neglecting your financial future!
It is essential that you get in the habit of setting some money aside as often as you can. No matter how small!
If you can only afford to save £10 per week that still adds up to £520 per year! Or maybe you can set aside £100 every month. This would give you a very healthy £1200 in your savings at the end of the year. Think of how much that could add up to over 5 years!
Even a small contribution to your savings or investment account will vastly improve your finances, especially when it comes to your money mindset. By consistently saving you are telling yourself that saving for the future is a priority for you. This will help you make more sensible spending decisions in the future and is sure to set you up for financial success.
I am not an expert so I cannot give you any specific investing advice but if you haven’t started yet because it seems daunting or complicated, I understand! I was in your position not too long ago but I can assure you that investing doesn’t have to be scary or complicated. And you certainly don’t have to take major risks with all of your money like you are on wall street! There is tonnes of information out there perfect for beginners, so just start small and see how you feel.
You still have unnecessary Subscriptions
Did you know that almost half of us waste money on unused subscriptions every month? In fact, research has found that on average,households waste £170 every year!
That is a lot of money to waste on something you are not using. So, check your bank account and assess how many subscriptions you have, and which ones are just not worth the money for you anymore. Simply cancel them and that will be another great way to quickly save money and instantly improve your financial wellbeing.
Don’t fall victim to this really simple, bad money habit!
You don’t get Cashback on Every Purchase
If you find it hard to save money, then cashback should be your best friend! You can save money without even thinking about it!
And because we all need to save money at the moment, many new companies have recently launched to help us do that. This is a big win for us as you can get cashback on practically everything you shop for! Be it online or instore, groceries, holidays, luxuries or even pet food, there is an app out there that will offer you a great cashback deal on your purchase.
If you don’t know where to start when it comes to cashback, don’t worry, I have done all the work for you! Here is my comprehensive list of the best cashback apps and websites that you need to save money on every purchase.
If you are not getting cashback on your purchases then you are leaving money on the table!
Conclusion
Breaking free from these 8 bad money habits will stand you in good stead for a stronger financial future.
Remember, your financial wellbeing is a crucial part of your life, and as much as we sometimes like to ignore our money troubles, they are never going to go away on their own.
Take charge and have an objective look at how you manage your money.
How many of these bad money habits are you guilty of?
Once you have identified them, it becomes much easier for you to use our tips to help yourself and ultimately overcome all of your financials faux pas!
- How to Finally Stop Emotional Spending
- Avoid these Frugal Living Mistakes if you Need to Save Money!
- How to Shift to a Positive Money Mindset
- Find out How you Can Instantly Improve your Finances
