- Personal Finance
Habits That Are Draining Your Wallet
Money is not only linked with the economy, it also provides a sense of security and comfort in a deep way. If you try to deprive yourself of spending, then after a few days, you give up, overindulge and then overspend. Good habits happen when planned.
Tips To Bust Bad Money Habits
Bad Money Habits
- Lack of financial records. Most of us do not file away receipts. If you are not organized with your receipts and expenses, you can lose money without even knowing it.
- Following the crowd when investing in the stock market. Many people tend to get caught up in the hype about the stock market. When market news is good, they buy, and when it is bad, they sell. They are at a risk of bankruptcy when the market crashes. You should always consult a stock broker with expertise in the field of stocks, who could guide you to purchase from genuine companies.
- Making impulse buys. Buying things you do not need is not frugal. Go for shopping making a list of what you have to buy, and stick to it.
- Using emergency funds unwisely. An emergency fund is meant to be used when you lose your job or get sick. Using it unwisely will leave it depleted for when a true emergency pops up.
- Failing to consider the Total Cost of Ownership when making a purchase. Many items require us to pay upkeep, storage, and usage fees. Pools, boats, hot tubs etc. fall into this category.
- Leaving the lights on. Turn off the lights when they are not in use. It will reduce your power bill and is good for the environment.
- Saving too little and waiting until the end of the month to save. As long as you have money to spend, some or the other expenses will come up, and you will never have money left at the end of the month. You would not miss the money you don't see. Setting up an automatic deposit into your savings account directly from your paycheck is a great way to fix this habit.
- Paying with plastic. It is psychologically easier to whip out a card to buy things than it is to use hard-earned cash. Depending on debit and credit cards to cover your day-to-day spending often opens doors to overspending. So, shelve the credit cards. Figure out how much cash you will need for the day and put that much in your wallet. Leave your cards in a safe place at home, or put them in a less convenient place in your wallet or handbag.
- Living without a budget. A spending plan lets you see the flow of your money. It allows you to make intelligent decisions about how to manage your hard earned cash. Make a list of your fixed and variable monthly expenses. Then decide what to eliminate. Shop from local supermarkets instead of specialty stores. Set a little aside for occasional expenditures like clothes, appliance repairs, and vacations. Take your spending off of autopilot. It is easier to get disconnected from your finances when money comes in and goes out automatically. Start keeping a log of where you are spending your money. Read bills and statements. Cut out the nasty surcharges from your life.
Situations When You Often Overspend
- When on a vacation. Spending on experiences rather than on material things makes us happier. Plan your vacation in advance.
- When you have a coupon. Shopping with online promotional codes and discount sites makes us spend more.
- While you are out on the town. Be that peer pressure or enjoyment, it is easy to get caught up with the moment, especially when that moment is great fun.
- When amidst an economic crisis. Splurging when already in a hole is common human behavior. It is thought to temporarily boost self-esteem. To battle this urge to splurge, treat yourself occasionally, but smartly.