It is all too easy to fall into bad money habits, and once the pattern is there, it may seem near impossible to break. It is essential to be self-aware and notice them before these habits potentially ruin your credit, livelihood or relationships. We are here to help by pointing out seven bad money habits you need to avoid.
“Money tips for women often discuss all of the things you should be doing, but they don’t always acknowledge the things you do that actually hurt your finances. If you’ve got any of these bad money habits that are keeping you broke, it’s time to ditch them.”-Frugal Chic Life
Spending Above your Means
It’s easy to get into debt by overspending. To avoid this, it is important to be honest with yourself and others about your budget. Don’t overdo your spending by trying to keep up with the latest and greatest. It will only hurt you in the end. Moreover, if you reach an unmanageable point with your overspending, digging out of debt is not easy. You need to be realistic when looking at what you have to spend. To avoid this, set long term goals towards things that you want and pay off your debts in a timely manner.
Taking Financial Advice from Friends
It is normal to want to talk about your problems with friends. But unless your friend is a financial professional, you may need to take their advice with a grain of salt. Friends can help hold you accountable for your money goals. But what works for them may not be the best fit for you. If you are seeking serious advice, go to credible sources such as credit counselling services.
Loaning Money to Friends and Family
Loaning out money is a slippery slope. Often times, we want to help the people we care about. But we need to make sure it does not jeopardize our own finances. There is a reason they say money and family don’t mix. Be sure that you think over any money-lending beforehand. And if you want to lend, make sure it’s within your means to do so.
Consider how important it is to you to get the money back, and get the terms of the loan in writing. It can be challenging to treat these personal relationships so rigidly. But maintaining good financial health is essential for your own well-being.
Credit Card Dependency
This is one of the major bad money habits people tend to fall into early on. The maximum amount of credit cards any one person should have is two. And these are just to help build your credit and use consistently. Sales and online shopping can be all too tempting. However, it is important to not put the credit that you have built at risk. Store credit cards may offer great deals. But you need to consider the interest rates, and often you will find that it is not worth it.
Once you start using credit cards, it is easy to get behind in payments and rely on your cards to keep your head above water. It is important not to do this and only spend what you have. Credit cards should be used as a credit building tool, not to get you by until your next pay-check. Because at that point you enter a cycle of dependency and debt.
Putting off Student Loan Payments
Higher education can be financially burdening. Many graduates find themselves in crippling debt. Once you consider the amount of interest on your student loan, it may seem impossible to pay it off.
Some ways to avoid student debt are the following:
- Work while in college
- Sign up for a work study program
- Apply for grants/scholarships
- Take advantage of employee reimbursement programs
If after taking all these steps you find that you still need to take out a student loan, it is important to start repaying it as soon as possible. It is all too easy to shrug it off during deferment and even after repayment has started. Usually this happens because you think you don’t have the money. However, the interest keeps building during all that time. And you are slowly getting more and more in debt by not making any payments. If this is a struggle for you, talk to a loan officer about consolidation or special payment plans catered to your income level.
“Interest accumulates and your debt continues to grow. If you have debt, it’s time to face it head-on and make a plan to pay it off.”-Frugal Chic Life
Lack of Retirement Planning
When you are young, it is easy to feel like you will live forever. Or that retirement is too far in the future to be any worry. The truth is that it will come much faster than you think. And it is vital to be prepared when the time comes. Starting a 401k at your work may be the right step for you. Or you could start saving in an account that you can’t touch such as a CD to help you build a nest egg. If you need help with these options, sit down with a banker from your local branch, and they can help you weigh out your options and decide what will work best for you.
Lack of Financial Communication
When living with other people, whether it be a roommate or significant other, it is important to discuss finances regularly. This will ensure that both of you are on the same page. Make sure there are no surprises when it comes time to pay the bills. If there is a potential issue, it should be discussed right away. This way, proper planning can be done to make sure everything is paid in a timely fashion. Although these discussions may be uncomfortable at times, working together in this way will help make your home stronger.
By avoiding these bad money habits, you can decrease financial issues in your future and will be able to successfully save, plan and grow!
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