Are bad money habits holding you back?

There is no doubt we’ve all experienced bad habits and vices in many areas of our lives. However, it’s important to bring your attention specifically to bad money habits, how to identify them and how you can break away from those habits for an improved financial future.   

If you always struggle with money or can’t save enough, it might be because of bad money habits. These sneaky habits can go unnoticed but can greatly affect your financial well-being. You can escape these habits and create a better financial future by being aware and making small changes.

Impulse Buying

One common bad money habit is impulse buying, especially during big sale events (for example, Black Friday). It’s tempting to be persuaded by marketing ploys and buy things without much thought, but these impulsive purchases can lead to debt.

To overcome this habit, try implementing a 24-hour rule. Before making any non-essential purchase, give yourself a day to think it over. This will help you determine if it’s something you truly need or just a fleeting desire.

Not Track Your Expenses

Another bad money habit is not tracking your expenses. Losing track of where your money is going is easy, especially with the convenience of credit and debit cards. However, this lack of awareness can lead to overspending and a distorted view of your financial situation.

Start by creating a budget and tracking your expenses diligently. Many apps and online tools are available that can help simplify this process. By tracking your expenses, you can make better choices and find places to save money.

Living Beyond Your Means

Living beyond your means is another common bad money habit that can hold you back. Wanting the latest trends and gadgets is tempting, but spending more than you earn leads to financial stress and debt.

Take a hard look at your income and expenses and make adjustments accordingly. This may mean cutting back on unnecessary expenses or finding ways to increase your income. Living within your means involves balancing your desires with your financial capabilities. It does not require you to completely give up everything you enjoy.

Procrastinating on Financial Planning

Lastly, procrastinating on financial planning is a bad money habit that can hinder your progress. Whether it’s avoiding creating a will, neglecting to save for retirement, or putting off paying your debt, the result of failing to do anything in this area of your life can have consequences for your financial future.

Take the time to assess your financial goals and create a plan to achieve them. Break down your goals into smaller, manageable steps and set deadlines for yourself. By taking action now, you’ll be setting yourself up for a more secure financial future.

How do I identify my bad money habits?

We will learn to change our money habits and beliefs through exploring and discovering our own financial situation. Money holds a significant place in our lives, shaped by our experiences and beliefs.

We need to acknowledge these influences, honestly evaluate our finances, and make a plan for positive change.

Childhood influences on financial beliefs

Our financial beliefs often start within the walls of our childhood homes. The attitudes and behaviours of our parents regarding money can silently shape our beliefs about finances in profound ways.

It helps to think back to your formative years. Did your parents save money carefully or did they spend freely without thinking about the future? When you can better understand your money story, you can identify how your habits came about.

If your parents saved money and planned well, you might have learned to save and plan too. If you often spend impulsively, you might have developed a preference for instant rewards without realising it. This preference can make it challenging to save money for future goals.

Recognising these influences is the first critical step towards understanding your current financial beliefs and habits. Even though your experiences shape your money mindset, you can change these beliefs for a better financial future.

Assessing your current situation honestly

Now, let’s delve into the present – your current financial situation. This step may feel uncomfortable, but it’s an absolute necessity.

Gathering the facts and looking at the numbers all together will help you further. Gather your bank statements, compile your bills, and lay out your financial landscape for close examination. These should paint a clear picture of your situation.

This exercise might reveal that you’re effectively managing your expenses, consistently saving, and investing for your future. If that’s the case, congratulations – your financial habits are in good shape. However, for others, this exercise may unveil a different reality including things like:

  • substantial debt
  • depleting savings
  • living a paycheck-to-paycheck.

You cannot overstate the importance of this step. Knowing your financial position is like knowing your exact location on a map. Planning a path towards financial stability and success is crucial.

The influence of those around you

Let’s shift our focus to the people in your life – family, friends, and colleagues. The company you keep significantly impacts your financial beliefs and behaviours.

Take a moment to evaluate your inner circle. Do they manage money wisely, saving for the future, or do they spend impulsively, seeking instant gratification?

The influence of your social environment can be subtle yet potent. If individuals who prioritize financial responsibility surround you, you’re more likely to adopt similar habits. It can be difficult to resist the influence of friends who spend a lot and don’t prioritize saving money.

Being with financially responsible people can help and motivate you to change bad money habits.

A plan for gradual change that is achievable

Transforming your financial habits isn’t a sprint; it’s a marathon. The key is to start small and maintain consistency. While New Year’s resolutions can be tempting, they often lead to disappointment because they’re unrealistic and unsustainable.

Instead, what you need is a plan for gradual, sustainable change. Break your financial goals into manageable, bite-sized steps. If you’re wrestling with credit card debt, set a modest target to pay off a portion each month. As you achieve these incremental goals, you’ll gain confidence and build momentum.

Celebrating milestones to keep momentum up

As you journey towards financial transformation, it’s crucial to celebrate milestones along the way. These celebrations serve as reminders of your progress and keep you motivated. They must not be extravagant; a small treat or a simple acknowledgment of your achievements is enough.

The significance of celebrating milestones lies in the psychological boost it provides. It reinforces your commitment to unlearn bad money habits and reminds you that you’re on the right path.

Your financial journey

Your journey to unlearn bad money habits and challenge your beliefs about money is a long term process. Your past, present environment, and determination shape your financial future.

The journey can have plenty of detours and takes a lifetime to master. But you have the power to make changes and reap the benefits.

Remember that your financial journey is unique to you. Comparing yourself to others or trying to achieve someone else’s definition of success will only lead to frustration. Instead, focus on your own progress and celebrate each milestone along the way.

One way to stay motivated on your financial journey is to set small, achievable goals. These goals can be as simple as saving a certain amount of money each month or paying off a credit card debt. Break significant financial goals into smaller tasks. This helps you stay on track and feel accomplished when you reach milestones.

Another important aspect of your financial journey is surrounding yourself with a supportive community. Having supportive people in your life, whether they are friends, family, or online, can greatly impact your goals. They can offer advice, share their own experiences, and provide the motivation you need to keep going.

Your financial journey is not only about reaching your goal, but also about the things you learn. Having a good relationship with money and making choices that match your values and long-term goals is what it’s about. So, celebrate each milestone, no matter how small, and keep moving forward on your path to financial freedom.

Get in Touch

Contact Gild Wealth if you need help with your money habits. They can support you on your financial journey. Gild Wealth has experienced financial planners who can provide assistance, no matter what stage of your journey you are.