Everybody has bad habits, it’s part of what makes us human. Whilst most of our bad habits are relatively harmless, some can harm our long-term and short-term well-being.
The same is true with spending habits—while some may lead to temporary financial setbacks, others can chip away at your savings goals.
If you’re experiencing difficulty managing your money, you’re not alone. Bad spending habits are more common than you may think. It can be challenging to make conscious financial decisions all the time, however, the simple financial choices you’re faced with on a daily basis could make or break your financial targets.
Old habits die hard; the same is true for bad spending habits. If you find yourself with little to no savings and spending more money than you earn, it may be time to look at your bad habits and develop a better way to manage your money.
By building good spending habits, you can start to increase your financial situation and set yourself up a more stable future. These habits also help you learn to budget, save money, and work towards your savings goals.
In this article, we’ll examine four bad spending habits you need to avoid and some tips to combat them.
1) Excessive Debt
Not all debt is bad, as long as you manage it well. While being in debt isn’t necessarily a problem, it’s what kind of debt you have and how you manage it that counts.
As long as you have a solid repayment plan, debt can help you build your credit score over some time. However, if you let these balances accumulate for too long, you may end up paying more in interest over time, delaying your ability to overcome debt and start saving.
When it comes to bad spending habits, you may not be able to avoid debt altogether, but you can take steps to avoid bad debt. By creating a budget, paying your credit card balance in full, setting up an emergency fund, and borrowing only what you need, you can effectively manage your debt better.
2) Impulse Buying
Are you the type of person who likes to buy things, even if you didn’t plan on the purchase? While occasional impulse spending doesn’t typically leave a lasting impression on your finances, making it a consistent habit can derail your goals.
Among the top bad spending habits, impulsive or compulsive buying is one of the most concerning as it can lead to significant overspending, leading to bigger issues. Some examples of impulse buys are in-app purchases or last-minute additions to your shopping.
Whilst frustrating at first, it becomes highly beneficial in the long term to start questioning every purchase. To avoid impulse buying, you should set your own guidelines around purchases and try your best to stick to them. You can also avoid impulse purchases by setting spending limits for apps you use regularly or setting a predetermined amount for your shopping —something you may find easier to do once you’ve made a budget.
3) Failing To Follow Your Budget
A vital component of getting out of debt is making and sticking to your budget. While it may not be fun to plan and look back at every purchase, creating a budget is a great strategy for effective money management.
Budgeting is a healthy financial habit to build to help you live within your means. Sticking to your budget also makes it easier to adopt other good spending habits, that may otherwise feel impossible.
When creating a budget, you need to recognise and address your bad spending habits to ensure you stay on the right track. It’s incredibly common to struggle to follow a budget or quit due to feeling like it’s too much work. If you’re experiencing similar thoughts, try using budgeting apps to make the process easier and more convenient. But don’t let a few slip ups hold you back.
Another helpful trick is to consider your ultimate financial goals. Do you want to get out of debt, have larger savings or gain financial security? By keeping your goals at the forefront of your mind, it helps you stay motivated in following your budget.
4) Spending Your Savings
Do you think you’re saving enough? Are you aware of how much you’re saving—or how much you need to save, based on your age and income levels? If you’re struggling to answer these questions, you may need to look at the spending vs saving ratio in your budget.
Not setting aside money for savings or worse, spending your savings, is one of the most common bad spending habits that many people struggle with. Many people want to save money. However, if you think of saving money as a future desire to accomplish someday, you’ll likely not save much at all.
Instead of just dreaming about saving, you need to take proactive steps to do so. Consider setting SMART savings goals. Once you set SMART savings goals, build them into your budget. This will make it easier to save money, without pushing it to the back of your priorities as a financial goal.
Choose Salad Money for Fair and Affordable Personal Loans
Our financial well-being is heavily influenced by our spending and money management habits. That’s why identifying and addressing bad spending habits is an essential step towards reshaping your financial narrative. By learning from past errors and making consistent improvements, you can develop good financial habits and improve your financial future.
At Salad Money, we care about your financial well-being. We also understand that life can be challenging, and everyone goes through tough times. That’s why we offer fair and affordable personal loans to help you overcome financial challenges.
As a leading online UK lender, we offer the support you need to get back on your feet. With our ‘More Than Your Score’ loans, you receive the financial support you need regardless of your credit score.
Our open banking-based system analyses your loan affordability based on your current situation, instead of just your financial history. What’s more, we are an FCA-regulated and authorised organisation, so you can trust us to keep your financial data secure.
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