Even with high incomes or strict budgets, some bad financial habits can still make one economically unstable. Do you find yourself struggling to keep your accounts afloat, even with plenty of income? Or just wondering what bad financial habits drain finances the quickest? Read on and discover what you should avoid…
Not Budgeting
Every financial expert can agree on one thing: it’s nearly impossible to have a stable economic life with no monthly budget. At best, it means you don’t know how much money sits in your accounts and, without a budget, you’re likely not spending. At worse, not having a monthly budget and plan can result in missed payments and lower credit scores. Starting a budget is easy: simply count up your expenses and income. Even from this simple step, most people begin to understand where they’re spending too much. Once you’ve got these numbers, you can start saving or even start using a better tracker, like a budgeting app. There are a lot of smartphone apps to help out, including Zenmoney and YNAB.
Compulsive Buying
Part of compulsive buying has nothing to do with the shopper. Stores know precisely how to display and price items, so shoppers want to buy them. At the end of the day, they are using emotions and desires against us. Unfortunately, far too many buyers fall for these tricks and gimmicks, impulsively spending money they do not have on unnecessary things. However, you don’t have to fall prey to these sales tactics! When looking at the sale in any shop, stop and consider if you truly need the item at home. If you think “maybe,” take three days and continue to think about the purchase. Most of the time, you won’t return to the store.
Having No Emergency Fund
An emergency fund is the mark of a financially-healthy, forward-thinking adult. Most young people don’t think about incidents like injuries, broken cars, or even worse, a burglary. In cases like these, emergency funds are like superheroes, coming to the rescue. An emergency fund can help people through immediate troubles, often troubles that would be too expensive otherwise. Without an emergency fund, spenders often need to put significant purchases on credit cards, which just leads to more payments and debt.
Bad Personal Habits
Sometimes, compulsive spending is just the beginning. Spending, gambling, drinking too much, and other bad personal habits or addiction can drain one’s funds in the blink of an eye. Once bankrupt, these addictions can push people to get into worse and worse financial situations. If this sounds like you or someone you love, first talk to them (or someone else). However, if things do not get better, it might be time to look into therapy for how to break bad habits.
If you’re still finding it too hard to create your budget, be sure to contact a financial advisor. They will help you eliminate bad financial habits, while also helping you set goals and restraints you can actually follow.
Sources: Finance101, TheBalance