When you’re looking at your money habits you need to consider your bad habits and any things you do that aren’t working for you and your financial future – do you have a bad smoking habit that costs you lots of money? Are you spending too much money on take out? Could you invest the money you spend on a gym and go outside for a run instead and save money?
Being financially savvy is the key to financial wealth for the long term and if you want to qualify for a home loan or personal loan you need to have good money habits otherwise you will get knocked back. Here are some money habits you will want to break in order to gain the financial freedom you crave.
1. Spending more than you earn.
We all have done this at some point in our lives, spending more than you earn is a fast way to wind up with a bad money habit and you need to break out of that habit as soon as possible so you can start on the path to financial freedom. Set budgets and stick to them so you don’t fall into bad money habits each month.
2. Ignoring your retirement
While it might seem like a lifetime away you need to consider retirement and whether you will have enough to support you through your retirement days. If you have an employer-sponsored 401(k) program or your own retirement fund, make sure you are making contributions and you are aware of how much you need to get through retirement comfortably.
3. Skipping a financial cushion
We all need an emergency fund in case something drastic happens in our life and we need a financial lifeline, so make sure you have a savings account that you can use for a rainy day that has enough cash in it for medical bills or unforeseen expenses you might need to cover in an emergency.
4. Paying only the minimum
Pay more than the minimum on your credit card otherwise, you will wind up in serious amounts of credit debt. The monthly minimum is not enough to avoid being slugged with high-interest rates so pay much more than the minimum to avoid paying hundreds or even thousands in interest fees to the banks.
5. Paying your bills late
If a bill comes in you leave it until the last minute and then you might even forget it all together until the debt collectors or final reminders come in – this type of money habits are going to wind up costing you in the long run financially and for your credit rating, so keep your slate clean and practice good money habits.
6. Not understanding your health insurance
Your health insurance might seem costly so you wind up choosing the lowest cover and then you realize when you need to use the policy for a specific health issue you’re not covered. Being poorly covered or not being covered at all can put a massive strain on your financial health and is a bad financial habit – do the groundwork and make sure you’re insured to meet your needs including maternity, dental, and anything else you think you might need in the foreseeable future.
7. Poor management of extra money
What do you do when you get a windfall of money – do you spend it up big on a new bike or wardrobe or do you put it away for a rainy day. For those with bad money habits it is usually the first option, however, poor management of money is something that you need to break when you want to boost your financial position and practice good money habits.