Behaviors That Threaten Your Finances

Good financial health is essential and it’s important to know what behaviors and habits threaten your finances so you can make wise decisions. From failing to budget to going into debt to impulse spending, this article dives into the behaviors that can sabotage your finances and how to avoid them (or turn them around if you find yourself engaging in them).

Understanding Bad Financial Habits

There are certain behaviors or habits that can put your financial future at risk and should be avoided at all costs. Some of these detrimental money decisions include:

1. Failing to budget: One of the worst financial decisions you can make is not budgeting at all. Budgeting will help you plan expenses, understand what you can truly afford and make sure you’re setting aside money for savings and investments.

2. Going into debt: Debt is a reality for many, however, it should be taken seriously and given a plan of action so that it can be nearly paid off or paid off as soon as possible.

3. Neglecting to pay bills: This is a bad habit that can lead to financial ruin and it’s important for everyone to be aware and responsible for all of their bills, whether they’re monthly or annual.

4. Impulse spending: Impulse spending can result in buyers remorse, it can also have a negative impact on your financial health. Impulse purchases often don’t fit into your budget and can quickly add up.

5. Living beyond your means: Spending more than you make can be a slippery slope – it’s normal to want things that you can’t afford, but it’s essential to learn to distinguish between needs and wants.

6. Investing without research: Investing money without researching the different options or options available is a costly mistake that can lead to the loss of your hard-earned money.

7. Not having an emergency fund: Unfortunately, there are unexpected expenses that come up and not having money set aside in an emergency fund can quickly deplete your finances.

8. Not saving: Even if you can’t save a lot, it’s important to save something and make it a budget priority.

Avoiding Bad Financial Habits

The key to avoiding the aforementioned bad financial habits mentioned is to be conscientious of the decisions you make and proactively making positive money choices.

Some things to keep in mind when you’re trying to practice responsible financial habits include:

1. Make a budget and stick to it: A budget is an essential part of managing your finances and it’s important to create a budget and stick to it to be able to save money.

2. Pay attention to your bills: Make sure you know your due dates and that you’re paying everything on-time, as late fees and penalties can add up quickly.

3. Avoid impulse purchases: When faced with an impulse purchase, take a step back and remember that it’s not really worth it if it doesn’t fit into your everyday life.

4. Set savings goals: Saving is often difficult, but setting a goal to save money can be a powerful motivator. Try setting a goal to reach something every month or be able to save up for a certain item or experience within a certain timeframe.

5. Start investing: Research the different investment options available and make sure you are investing in something that fits your risk profile.

6. Envelope budgeting system: This old-fashioned method of budgeting still works and can help you better manage your money. With envelope budgeting you have an envelope for each budget item and you put a certain amount of cash into each envelope for the month.

7. Monitor your spending and expenses: Take the time to look at your bank statements and expenses to keep track and make sure nothing is slipping through the cracks.

8. Don’t neglect your emergency fund: Make it a point to set money aside for your emergency fund and adjust your budget so that you are saving at least 10-20% of your income each month.

Tips For Improving Your Financial Habits

If you find that you’re struggling with bad financial habits, there are steps you can take to turn them around and become a better manager of your money. Some tips for getting yourself back on track include:

1. Automate your savings: Automating your savings is an easy way to save without having to think about it. Set up your savings account or retirement fund to automatically deduct money from your paycheck to be deposited into your savings or retirement account.

2. Make a list of your expenses and income: This will help you have a better understanding of what your income and expenses are, and help you be more conscious of your spending habits.

3. Track your spending: Download a budgeting app or use a spreadsheet to create a budget that helps you track your spending, savings, and investments.

4. Use a budgeting system: Use a budgeting system like the one mentioned above, or this could be a budgeting software that helps you keep track of your spending and budget.

5. Live within your means: This is easier said than done and often takes a good amount of discipline, but it’s definitely doable. Make sure you know what you can spend and use that as a guide.

6. Stop using credit cards: If you already have credit card debt, dedicate yourself to paying it off and create a plan to make sure you pay off the debt as quickly as possible. Avoid using credit cards for the meantime and focus on paying off your existing debt.

7. Get a financial advisor: If you’re struggling and need assistance, a financial advisor can help you identify the best course of action for getting your finances back on track.

Although it’s not always easy to avoid bad financial habits and make wise money choices, it’s crucial to strive to make better financial decisions. By educating yourself, doing your research and following the steps above, you can take control of your finances and create a healthier financial future.