Bad Spending Habits. We’ve all had them or still have them. To be able to develop better habits we first need to see and understand which money habits are bad ones! Here are my top 8 bad money habits.
1. Spending More Than You Earn
Spending more than you earn or ‘overspending’ is probably the worst financial habit you can have. Although very common with a lot of people not even realizing that they are doing it.
Some weeks may be good and you will have money leftover then some weeks may be bad as you spend much more than you budgeted for by doing things like shopping online using pay later schemes. These bad weeks can have a huge impact on you financially and cause huge setbacks.
Spending more than you earn is the number 1 bad money habit in our list for a good reason. Spending more than you earn will result in more debt, more interest payments and leaving you worse off financially.
2. Keeping Up With The Joneses
Social media is drenched in people flaunting material possessions, extravagant vacations etc… sometimes making you feel as if you don’t have the new trend of clothing or latest gadget then you’re somehow less than others.
Absolutely not and this couldn’t be further from the truth!
Stay in your lane! Keep your eyes on what you’re trying to accomplish and to be honest F**k what anyone else thinks!
Trying to keep up with that instagram model that always seems perfect is a bad money habit that will cause you a lot of problems financially.
3. Paying Yourself Last
The term ‘paying yourself’ refers to your savings. You need to have this a part of your regular ongoing ‘bills’ with paying yourself first as a priority.
Setting a good, manageable budget is the best way to make sure you pay yourself first.
4. Impulse Buying
We’re all guilty of it right? I still fight to rid myself of this bad spending habit almost daily. Impulse buying is the enemy of a well structured budget.
Remove the One Click Buy Now option from your amazon app. Before buying something you do not need to try this. Add it to your cart and let it sit there for 1 full day. If you still think the item will serve a purpose to you then budget for it in your next cycle.
A lot of impulse buying only results in temporary satisfaction. Combat the need to ‘have it right now’ and think it through. Considering if it’s really something you need or want.
5. Winging It
Not having a budget in place or any financial goals is basically winging it. A Bad spending habit for anyone who wants to excel financially. Sure, it could work out a few years from now but more than likely you’ll be in this same financial standpoint without a plan.
Set yourself financial goals. Both long term and short term and work towards these by having a part of your regular budget contributing to your goals. Long term goals are things like home deposits. Short term goals are things like holidays.
6. Only Putting Money In a Savings Account
Everyone should have savings as part of their regular weekly budget. If you are saving, great! But, if you are simply putting your money into a normal savings account or worse yet under your mattress you are in fact slowly losing money due to inflation.
I suggest splitting your savings into 3 parts. Firstly, a high interest savings account that all banks offer. Do your research when deciding which bank has the best savings account for you. There is more to it than just the interest rate.
Secondly, Investments. We invest in index funds covering a wide array of industries diversifying across a lot of sectors. There is steady growth in investing in index funds. We have part of our savings this way and have an automated regular contribution. You can also look into having this done through your super!
Thirdly, Extra debt repayments. The most boring of the 3 but most likely the most beneficial. The last part of our savings goes towards paying down our existing debts like personal loans and mortgage.
Paying extra onto your debts does a couple things. First it pays it off the principal amount quicker. Second, it lowers the amount of interest you end up paying.
Diversify your savings and benefit financially. Begin to change these bad spending habits.
7. Not Tracking Your Spending
If you are someone that struggles with impulse buying and spending more than you earn then you 100% should be tracking your spendings. Even if you don’t, this is still a good money habit to get into. Tracking spendings is the best way to know exactly where every dollar of your income is going.
There are plenty of apps these days that can do this automatically too! Once you start tracking your spendings regularly, you’ll start to notice where you are wasting money. Things like ATM fees, bank fees, unused subscriptions or anything else that may slip by without you noticing can be picked up by tracking spendings.
You’d be surprised how much you can save by developing this habit alone.
8. A Consumer Mindset
We are indulged to have a consumer mindset for most of our lives. Everything everywhere tells us that we need to buy, eat or just outright consume! This mindset of thinking that we need to spend money is what causes us to remain broke.
Start thinking of how your money can be used to create more money.
Investing is one way for instance. The idea here is to develop habits that counteract the predisposed idea that we have to spend our income rather than use it to generate more income.
8 Bad Spending Habits
By putting focus on developing better money habits we will ideally end up with not just more money in our own pockets but be able to share more with others and be happier. Well, that’s by sunshine and rainbows outlook anyway.
Start simple with a budget and tracking your spending’s. These 2 good spending habits alone can give you a lot of savings.