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Do You Have Bad Money Habits?
Nowadays more than ever, people are struggling with their money. No matter how much they make, many people just cannot get the needle to move in their bank account. When it comes down to brass tacks, there are only a few bad money habits that contribute to their financial struggles.
1. Not Budgeting
Do you know where your money is going each month? Most people don’t, and that is unfortunate. Having a clearly thought out budget is imperative to proper financial health. Without knowing where your money is going each month, you’ll never know where you should be cutting back!
2. Not Investing
Investing is key to ensure your money grows over time. If you are not investing a portion of your money, then your savings is losing value over time! Inflation is an underlying factor that most Americans don’t account for. Even though the dollar amount stays the same don’t get fooled. Inflation is part of the reason why an egg carton doesn’t cost $0.78 anymore. Many people make the mistake of putting all of their excess cash into a savings account, instead of the market. Many more people make the mistake of keeping it in a checking account. This can cost you tons of money over the long term. Investopdia is a great site to start educating yourself about investments. They even have a stock simulator to practice your skills first!
3. Lack of a Plan
If you don’t have a plan or goals to work towards, it’s difficult to see a reason to save. Having clearly defined goals will help improve your money situation, period. An easy exercise to define a goal, is to close your eyes and envision one thing improving with your money. Think about one small step you can take to achieve this vision. Now, create a realistic plan to get to that financial goal. For example, if you want to make the goal of becoming financially secure, your first step may be paying off debt. Even more of a realistic first step is you pay off one credit card.
“Creating a plan will give you a path to follow and allow you to get to your goals faster.”
4. Lack of Knowledge
Having a basic understanding of finances can take you a long way in life. If you don’t have a basic comprehension of personal finance, some things can be a bit difficult or confusing. For example, if you don’t have an understanding of basic finance, you may not intuitively know what a good interest rate is! You get to decide on how you gain this knowledge; educating through classes or seminars, reading books or webpages, trial and error, or guidance from a professional financial coach.
5. Impulse Purchasing
With the ease of online shopping, it can be tough to avoid impulse purchases. Both online and retail stores have the job of trying to persuade you to make an unplanned purchase. Marketing departments have gotten really good at it over the time. Unfortunately though, over time, those impulse purchases really add up. For example, if you’re spending $20 each week on stuff you don’t need, that’s $1,040 per year!
