Wednesday, 9 September 2015

Bad Money Habits. How to avoid them?

Saving money is an art and is linked to what spending habits you have, because ultimately money habits decide how well or badly, you manage your finances.

Let`s discuss some money habits that can be avoided

Earning less and spending more: This is a habit that you need to avoid at all cost because this will hurt your budgetary planning big time, if at the end of the month you find out that you have spent more than earned, then you are overspending. The best way out of this habit is to monitor your financial situation on a daily basis and keep a tab on your spending, also take a look at all your spending per month and divide them into two major categories- need based and want based, spend on what you need and if your budget does not allow do not spend on those things that you want, however, if your need based spending also exceeds your earning then you should start looking for avenues to increase your income.

Putting your financial planning decisions on hold: This is the most common thing that happens with everyone, you make plans to save money, only to postpone it because at the end of month you are not left with enough money to save. Postponing sound financial decisions is worse than making bad ones. In due course of time the money you save starts giving you returns thereby supplementing your income and giving you financial security, hence the best time to invest is when you have money. Try and save every month however small the amount is, this will help you in future.

Taking unnecessary debts: In today`s ego- driven world where perception is everything, lifestyle based choices often pushes you to go into debts that are not necessary, if your wants for whatever reasons are pushing you into debts, it is an habit that needs to go. Debts that are necessary like a home loan or child education are essential and should be availed; however debts to pamper your
lifestyle should be avoided at all cost.

Not having the saving habit: People who are successful will tell you that they started saving early, saving is a habit if inculcated early can give you financial security blanket, however most of us do not save regularly. This is common if you spend first and then save. The best solution to this is that you decide on how much you can save on a monthly basis and put aside that amount as soon as you get your pay cheque.

Not making regular payments: Another area that most of us are not serious about, if you constantly make late payments towards your regular monthly bills like utility bills, credit cards etc. you are simply increasing your expenses, for example in case of credit cards if you keep on making payments after the due date there would hefty interest rates and late charges being accrued to you
card and that can create a lot of problems for you. It is always better to make payments on time to avoid these extra charges and unnecessary burden on your pocket.

So, the idea is to be smart about your finances and avoid bad habits so that your finances are not eroded.

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