Most people go through the day without really thinking about the two dollars spent here or the five dollars spent there. Many times, the items you buy unconsciously daily seem harmless, but do you know how much you are spending? When you keep a record of all your expenses for one month, it can be quite a surprise to see where your money is going. When you are trying to save every single dollar, you need to get very strict with your money. You need to be aware of where each dollar goes. You have to separate wants from needs. Even if you don’t have debts, bad money habits can make you not save money.
If you want to save money, the first thing you need to do is to be open with yourself. You need to account where every dollar goes for one month. If you are spending more than what is coming in, or if you are not saving a certain percentage of your income, you need to change your spending habits.
Here are some everyday bad money habits you need to stop and replace them with ways to save money:
Habits To Avoid And Ways To Save Money
1. Excessive Eating Out
If you spend money daily, eating out for lunch and dinner, you could quickly deplete your savings. Eating at home will save you money as you will be able to budget appropriately. Also, you will also have food left over for future meals. If you learn to cook at home, it can become a hobby for you, and you can share your food with friends and family.
Also stop making daily purchases of coffee, doughnuts or a bagel and juice before work. If a morning stop at the doughnut shop is tempting you, change your route to work. Also, avoid those trips to the vending machine for junk food each day at work. Snacks and drinks at the vending machines could be costly in the long run and are also generally unhealthy for you, so you can save money daily by passing them by. Plan to bring a healthy snack or two and drink with you from home. This could save you about $5 to $10 a day. It doesn’t sound much, but over the year it could total thousands of dollars.
2. Impulse Shopping
Do you purchase items you do not need or won’t use? Do you stop by a store to window shop then end up walking out with a pair of shoes? Do you just put things in your grocery cart with no thought to them at all? Do you spend a lot of time looking for potential items online? You must be an impulse buyer. One of the most destructive money habits is impulse shopping. Impulse buying can quickly eliminate your entire paycheck and your credit card available balance. The same applies to online shopping. Despite how fun it is, it is addictive. It’s a habit that keeps putting your financial life at risk.
To stop impulse shopping, do not shop unnecessarily. Don’t go into a store to look around. Don’t go into a store unless you have a specific item that you need to buy. Plan to bring a list with you or budget how much money you need. Eat a large meal before you go grocery shopping. This will help you avoid buying things that you don’t need.
Take time to think before you purchase an item. Ask yourself if you need it often if you give an item a waiting period. You will find that you don’t want it as much as you thought you did. This is an excellent strategy for dealing with those items that you feel you must have them.
3. Using Credit Cards To Make Everyday Purchases
Plastic money is a lot easier to spend than cash. It is also easy to lose track of what you spend when you charge items to a credit card or have the money taken directly from your account with a debit card. Besides, using your credit card to shop, you don’t experience parting with the cash, which keeps you more aware and helps you to think twice before spending.
Having credit cards is not bad, as they are handy in cases of emergencies. But if you pay for everything using your credit card, you may end up spending a lot more than you know. This leads to a situation where it will be hard even to pay the minimum monthly payment.
When you only use the cash in your wallet to pay for purchases, you become much more aware of your spending, and it is easier to track how you’re spending. Plan to determine how much money you need to save for a week for regular purchases and stick to that amount. Once you keep track of all the money you spend, you will be able to see what items or services you can cut back on. Even cutting back a tiny bit of your budget will be more money for you each month.
4. Paying Only the Least Balance on Your Credit Card
Not only overusing your credit card is a bad money habit but also paying the minimum balance on your credit card is an awful money habit. This option can be tempting if you are on a budget constraint, but it can cost you a fortune in the long term. Interest will accumulate, dragging you into debt for months, leaving you with no option but paying a lump sum on interest rates.
If you can afford to pay more than just the minimum amount, then please do. But it is much better to get into the habit of paying the balance on your credit can in full. Plan to automate the payment from your bank account to the credit company every month. It is also recommended to cancel your unnecessary cards. Most often, you will not need more than two cards. Most people can do with only a single credit card.
5. Personal Vices
Personal vices such as smoking cigarettes and excessive alcohol intake are the mothers of all bad money habits that you should avoid to save you money. Alcohol and cigarettes are expensive, and they don’t do anything good for you. We all know that it costs tons of money on that box of cigarettes each month.
To save some cash, cut back or give up on drinking and smoking. It may be difficult to quit these habits, but if you plan wisely, it will help your health and save you a lot of money. Quit other bad habits that may tempt you to spend large amounts such as gambling, and save that money to do something meaningful.
6. Making Late Payments
If you are these people who are always paying their bills late for controllable reasons, then you should know that there are dire consequences. Aside from being charged late payment fees, paying your bills late will negatively affect your credit score, and you might miss out on certain privileges from your creditor.
To avoid all these, learn to prioritize each payment and make sure you set aside money for these bills each month. You should also know how to effectively manage your finances by focusing on the things that you need. Even, think of an effective way that you can pay your bills on time to avoid late payments in the future. There are several effective ways, such as auto-debit payment facilities or use online bill payments. You can even plan to ask a friend or partner to make the actual bill payment for you if you do not have enough time.
7. Taking Payday Loans
Despite all your best efforts, every month, you seem to be running out of cash weeks before your next payday. And the next thing you know, you’re making deals with a payday lender already. This means you are spending everything you earn then going for the fast, instant loans. These are bad habits that make you not to save money. Usually, payday loans charge high-interest rates and should be repaid as soon as your next income or payday. Not paying such debt can get you into great difficulty. The lender can blacklist you, and your chances of accessing such services in the future will be slimmer.
To avoid securing a payday loan, learn to prevent any financial disasters by being aware of your spending habits. Save in advance and live within your means. Always set aside a part of your salary to cover emergencies. If you need money urgently look at other alternatives, you can pursue. Payday loans despite their apparent attractiveness as a financial escape should be your last resort if you need to pay off your purchases and debts.
8. Taking More Debt to Pay Off Another Debt
When you’re trying to get out of debt, whether you’re paying it off or going through debt settlement, there are certain things you shouldn’t do like taking another loan to clear the first loan. This will create more debt, and you may end up in a financial trap.
To pay off your debt, you need to break your dependency on debt, live within your means and track what you’re spending for just a month to have an insight into what you can do to free up money to put towards your debt. On-time debts payment can help you secure other loans, and can help you become financially secure in case of an emergency.
9. Not Giving Yourself an Allowance
Spending money wisely, having a budget, paying your bills on time, are good habits to have. But don’t be so strict with money that you are afraid to buy yourself anything. If for the past one month you’ve been spending your money more wisely, it’s time to reward yourself. Start taking your time to indulge a little, and enjoy the money you’ve worked hard for.
Get in the habit of paying yourself first. Start with paying yourself ten percent of your income every month. Put this amount into a savings account or an investment account. Set a goal to save more for some months, so you can have enough money to reward yourself once in a while and leave much more, which you can readily access in case of emergencies.
Be sure to also check out “What is “Me Time” & Why Every Mom Needs It” for info on how having time for yourself is not a bad thing.
10. Saving Without a Goal
Aiming to save money is not a bad money habit at all, but doing it with no goal in mind is associated with bad money habits. If you save lots of money, with nothing to achieve, then you don’t know where you are headed financially. Saving with goals help you build a plan to achieve those goals, which lead to a brighter financial future.
Having clear financial goals means you are assessing your financial situation now and where you want to be in the future. Create goals and outline the benefits each target will bring such as financial freedom. You’ll be able to go for a vacation and even start your own business. Once you look at the bigger picture, you will be motivated to save regularly. Setting goals gives you a sense of mission. You have the realization that all of your efforts and hard work have purpose or meaning.
Once you realize you have bad money habits, it is important to avoid them to save you money. Getting rid of bad money habits is not easy; it requires a lot of work and sacrifice. You also need to learn how to be pennywise, take full control of your finances, make firm decisions, and maintain self-discipline. Save a substantial amount of savings may take time, but you will get there and start enjoying financial freedom.
Thank you for reading! Be sure to also take a look at “6 Money Saving Challenges To Improve Your Finances” for more tips to save your money and being smarter with your finances.