Our lives revolve around our finances. Even when this is something that might sound way too inappropriate to at least acknowledge, the fact of the matter is that money indeed is more important than what we envision it to be. Because we no longer are living in the barter age or in an idealistic world where all our needs would be taken care of irrespective of whether we have the means to afford them or not, we need to be taking stock of our own earnings and expenses and savings to ensure that the way we live do not become the greatest source of stress in our lives. It is essential therefore that we see our finances as the means to secure and sustain our lives rather than blowing them away there and then without making provisions for a rainy day.
In this regard, what makes a really great difference is the financial habits we practise everyday. Staying away from bad financial habits and sticking to such ones that serve our purpose more efficiently is the key to ensuring that you don’t let your finances rule, and thereby ruin you. Here are some of the most commonly indulged bad financial habits that you need to ditch asap for your own benefit-
Spending more than you earn
Source: Teller Report
Needless to say, tending to spend way beyond your means is the no. 1 of the bad financial habits you can inculcate. Living outside of what you can afford is a dilemma that renders you only even more distant to your dream of the good life. When you feel obliged to spend more than what you earn, you are only leading yourself on a path of such finances that further get beyond your reach. You borrow and run into debt in your quest of catering to expenses that go out of what you can afford. And in those rare instances when you do manage to save up a bit, you idle away all that hard earned money in proportions that only aggravates your occasional living of the good months.
Ultimately, the bad days take such an enormous toll on your finances that not even the best of months can help you cope up with. It’s always wise therefore to spend only as much as you earn and even then, make allowance for putting aside quite some bit of the entire lot to serve your purpose when you aren’t really in a situation that can afford you to watch your expenses.
Splurging on an impulse
One of the worst ways to misuse your finances is to employ them in such situations they have absolutely no need for. Splurging can take a whole many interpretations, depending on whatever it is that you are mindlessly blowing away the moolah on. From regular indulgences like whiling away a major portion of your salary because finally, it’s pay day to everyday extravagances of eating out at the fanciest of places, there is no limit that the splurge seeks to amass. Treating yourself to a whole day of mindless shopping because you feel bored, stacking up on such things that you would like to try someday but still have not built the mood for, shelling out a fortune for those kinda ‘experiences of a lifetime’ very routinely, all these amounts to impulse splurging.
Impulse splurging is dangerous because it gives you a high that leads you on many such sprees of mindless spending. While the psychological satisfaction it gives might be real, over the time it however does burden your finances to the point that you no longer can afford them but are too dependent on the allure of it to make do without such splurges, leaving you therefore in a space where you are worse off mentally as well as financially.
Conforming to the credit lure
You might want to sue us for calling credit cards a scam but they really aren’t much different than that if you let yourself be dictated out and out by these cards that somehow make you feel rich. It’s easy to fall prey to the luxury that swiping on the card grants you, with access to as much spending as you want while overlooking the fact that it still would be you who would have to make the payment at a later date. While having to repay such a gargantuan sum already is constraint enough to your finances what makes this the absolutely worst among all bad financial habits that it can even land you in debt.
Debt itself is one evil that eats away at your money, no matter how substantial a sum you might be earning as an income. And specifically when you incur a debt to repay the amount of your credit money that you most likely whiled away not on the most worthiest of needs, the whole act of borrowing and repaying on interest will leave you with barely enough money to sustain yourself in the long run. Even when making use of credit card points because you feel you are benefitting from them, what you actually end up doing is spend even more than what you were already doing not so ideally.
Not saving enough
There is a reason why in economics income is always seen as the sum total of expenditure and savings. This is because it is as important to save some of your income as it is important to spend for the good life. Without any savings to fall back on, you are leading yourself on the path of a precarious future. Making allowances for contingencies and unforeseen circumstances that are so much a part and parcel of life, savings is an absolutely necessary dictum of finances to adhere to. And while saving any and every amount matters, it also would be all the more worthwhile if you take to saving substantially for a future free of worries.
It also is as essential to transform part of the savings into investment in order to get better returns. Because ultimately, the return that you get through investing and even through saving makes for a supplementary income to your main income source. In therefore staving off your saving habits, you are falling prey to one of the bad financial habits that would have you rather well off without it.
Retail therapy
The new gen is seldom the ones to be hoarding as such. For them, life is a take-it-as-it-comes experience where they end up at the departmental store every other day for a knick knack or two to pick up. While such frequent trips to the malls and stores already are bad enough because it leads you to having lesser control on your finances by way of the ‘inconsequential’ purchases you make every day, it also hampers you from saving up quite a bit.
Buying goods in bulk generally comes with a discount which makes for a rather effective way to save small sums. Specially in case of non perishable items that can include everything from food and grocery to laundry and home supplies, it’s always a better idea to pick up what you need for the month all in one go. That way, you reap the benefits of not just a price slash but also save yourself extra money and time and energy that daily queueing up at the payment counter is sure to cost you.
Not developing the haggling habit
It might come across as ridiculous to most of us that listing not being able to haggle is what we should consider as one of the bad financial habits. But even when it might not be something that you must absolutely develop, haggling or bargaining indeed can help you extract the most out of even your limited finances. Of course in the mall culture of today, bargaining skills seems to no longer hold importance. But for days when you are shopping in local markets or at vegetable mandis where vendors and sellers often quote more than exorbitant a price for their fares, haggling can go a long way in ensuring you save more than a few pennies.
While there are some who really lack knowledge of the ‘technique’ to haggle, some simply let sellers get away with the extravagant prices because they do not want to come across as ‘miserly’. But being a decent miser is no bad deal and one that would only hold you in good stead when it comes to getting a hold on the finances that so skillfully manages to evade you every time.
Not planning your budget
Yet again something that sounds old school but not planning a budget is one of the really bad financial habits ever. Developing a budget of expenses stems from the requirement to remain within your means but what planning the monetary trail also does is lend you with greater saving power. Once you are done with detailing such spendings that you cannot do without, it’s of course essential also to allow yourself the liberty of such purchases that enable you to enjoy life. Dining out, travelling, partying, going for the theater, paying your dance dues all needs to be accounted for in the budget. In such manifestations therefore, the budget tends not be a curtailment of your spending as popular notion tends to project it as.
Living within a budget only means that you come up with an account of exactly what and where you spend so that you learn to identify the justified from the reckless. In helping you keep a tab of your expenses, a detailed budget jotting also save you from forgetful overspending like the times you proceed to pay the dues twice because you couldn’t remember whether you had them all cleared or not. It’s always better to be doubly in the know about your financial status than remain in doubt about it which is why planning and maintaining a budget is so important an adage of all that matters when it comes to money.
Attaching too much importance to money
We know that we said at the outset that money is worth more than what we think it is. But does that make it so very worry to lose all your sleep over? Certainly not, at least not to the point where it drains your health. Because ultimately if you look at every possible spending option you would find that healthcare weighs down most of them when it comes to sucking the life out of you, figuratively as well as financially. Making money so much a ruling phenomenon to the extent that it negatively affects your health and also your relations with the world such that you lead a life that pushes you more and more into dissatisfaction, ill health and stress is also one of the lesser acknowledged but widely practised of bad financial habits.
Smart management of money involves not just watching how much you spend but also how to ward off such situations that warrant to drain your account out of a hefty amount. Constantly worrying about your expenses is no way to manage your finances. It instead is an intelligent recourse to action of how to cut down your spending pattern specifically in cases where you can readily avoid it that counts the most when it comes to be the efficient money manager that you can be.
