Habits are neurologically formed in our brains after continually repeating the same behaviour over and over. Habits are hard to cultivate and just as hard to break. When it comes to bad money habits on the other hand, we tend to form risky patterns easier, because, let’s face it, it is nice to spoil ourselves.
Bad money habits, like the four most common ones, can be overcome. And here’s how:
Bad Habit 1: Budgeting Smudgeting…
Are you living from one paycheck to the next without really knowing what is coming in or what is going out? If you don’t know the truth about your monthly finances, you won’t be able to make educated decisions on expenses, and you could get yourself into bad debt quickly.
Solution: Create a monthly budget and live by it every day. Before you make a purchase reference your budget and ask yourself whether or not you can you afford it. Budgeting is the first step in really understanding your financial well-being. Need help creating a budget? Click here.
Bad Habit 2: Not saving at all
If you aren’t saving, you have no cushion for any unforeseen expenses. Swiping your credit card or using your overdraft is your only salvation in the event of an unexpected payment. This habit will get you into trouble very quickly as interest and other extra expenses start piling up.
Solution: Saving should form part of your budget. Start small and grow your savings month-to-month by cutting non-essential expenses. Read more about the importance of saving by clicking here.
Bad Habit 3: Spending more than you earn
If your expenses outweigh your income, you are making debt in order to fund these extras, right? This habit will spiral out of control in a short period of time. The more debt you have the more you will pay on interest. Every month you will have to make more debt just to maintain your normal standard of living.
Solution: Cut your expenses. Start with luxuries like hair treatments, satellite TV, clothing shopping, take-aways, dining out etc. A budget will help you do this.
Bad Habit 4: An “Eeny, meeny, miny, moe” debt repayment strategy
Paying debt installments one month and ignoring it the next is the easiest way to get a bad credit record. You have to pay all your debt installments every month.
Solution: Make a budget and try and cut living expenses where you can. If you still can’t make ends meet, you are over-indebted and need professional help. Contact Debt Rescue as soon as possible.