It is interesting that you can have two individuals working the same job and earning the same salary, yet one will wallow in perpetual debt and the other will have enough to invest. The difference? Their money habits. If you handle your money the right way, it will reap great returns for you, no matter how little you may earn.
On the other hand, there are ways to handle money that will lead you straight into poverty, no matter how much you earn. Bad money habits result in little to no savings and no assets to show after years of employment. They result in perpetual borrowing and a tainted credit history that will keep you from accessing that mortgage that will usher you into homeownership.
So, how do we end up ensnared in bad money habits? Here are some of the steps that lead down that slippery slope.
Not Having A Budget
Not having a budget means you don’t have control over how much money you spend. You can therefore easily spend much more than you make, especially if you have access to a credit card. If you’re not operating within the four walls of a budget, you will end up spending money on frivolous non-essentials while neglecting basic items crucial for survival.
When you realize you haven’t paid your bills and your account balance is at 0, you will be tempted to borrow to plug in the gap. Not having a budget essentially means you cannot prioritize your expenditure. It also leaves you prone to impulse buying; all it takes is a friend to influence you in the wrong direction.
You might think those brunches and restaurant dinners you and your friends enjoy almost daily are cheap until you see how much they add up to at the end of the month.
Buy Now Pay Later
Retail store owners know that buyers won’t always have enough cash to buy items whenever they decide to shop. This is why a number of them offer buyers the option of picking up items and paying for them later in installments. Convenient as this sounds, there is a catch to it; you will need to pay interest. And the interest will be significantly more than if you had saved up and bought the item in cash.
Relying On Credit Cards
Credit cards allow you to spend money, which you don’t have. This is a good thing and a bad thing. It can allow you to cater for emergency medical expenses when you’ve maxed out your medical cover. On the other hand, your credit card can tempt you into splurging on luxury items you don’t need.
Besides tempting you into impulse purchases, credit cards also drain away cash from your limited resources as you pay interest.
What if you’re already sinking in credit card debt? Is there hope? Yes; you can think of taking a payday loan alternative that consolidates all your debts into one manageable monthly payment.
Make sure you keep up to date with payments for every service you’re subscribed to. If the service is for a place you no longer live, make sure you terminate it. If you had a shared subscription, ensure the other party lives up to their end. The last thing you need is a huge accrued bill running into thousands or the unceremonious termination of service.
Shopping When You’re Bored
When you were bored before, you had to get into your car or walk to the mall to engage in therapy by shopping. There is something cathartic about being in a well-lit mall and its upbeat piped music. You might go there with the intention just to kill time by browsing, but more often than not you will end up with an impulse buy or two.
With the advent of online shopping, you don’t have to leave the confines of your home to experience the release of endorphins that shopping prompts. All you need is to key in your favorite store’s URL or search for whatever you’d like to buy on Google. When the item pops up, you can check it out in just a few clicks. As you do so, you will be tempted into buying a number of similar items.
If you’re not careful, you could end up ordering a bunch of items you didn’t need. It is easy to spend money on many seemingly low-value items in the course of a week or month. When you tot it all up is when you will realize just how much you spent in the name of fighting boredom.
One Habit at a Time
Quitting bad money habits needs to be done gradually and thoughtfully if the changes are to be permanent. Instead of trying to drop them all at once, challenge yourself to try to drop one habit every month. The success of relinquishing one will propel you to try the next and so on until you’ve become the master of your money.