5 bad financial habits | That we need to forget as soon as possible

Unless we print banknotes at home in the basement, we probably have a limited amount of money available to us per month. Even if we intend to save, we may run into financial difficulties if we have poor spending or money management habits. These bad habits can cause unnecessary stress. Let’s see what are the 5 bad financial habits that pose the most threat to our financial situation.

The 5 bad financial habits

1. Impulse buying

Impulse purchases are about emotion. Impulse shopping mostly happens to us when we are not prepared to shop, we don’t think about exactly what product we need. In the shop, in the webshop we have some effect, an external stimulus - e.g. some sort of impressive advertising, action board, shopping experience - to which we respond by adding products to our cart that we didn’t originally design. Distributors and retailers are well aware of this, so we can see plenty of promotional products, sweets and magazines in the pre-checkout section, for example.

Tactics for this can be successful because they usually encourage the purchase of goods of lower value, for which we do not pick, think as much as for more expensive technical items.

To reduce impulse costs, we first recognize when to perform the operation. If "action" is the call word, consider whether we have extra money for that item. If you have and really need the product, just buy it. Give yourself time to rethink your decision and we will likely realize that we don’t even need this product.

2. We do not make a budget

We never have money left - if we don’t have a budget and don’t know how to distribute our revenue better.

The budget allows us to see how much of our money is coming in and where it is going. This allows us to make changes that can save us more money and avoid burnout at the end of the month.

In my opinion, budget planning does not equate to resignation, but just gives freedom.

Of course, if we’ve never planned our spending, it will require more attention at first. Yes, we need to step out of our comfort zone. We need to find out which method and system suits us. It may happen if we take a small amount of cash with us every day. We can use the envelope system for this.

If cash-free is better for us, you might want to try and use apps that allow you to automatically track your spending. All we need to do is update every day, sync with our bank account to make sure we’re within our budget, and adjust our spending or budget if necessary.

3. We rely on credit cards

Unless we are able to pay the balance in full each month, using credit cards is one of the worst things we can do against our financial situation. Especially when we live beyond our own means.

If we do not pay out our used credit card line in full by the end of the grace period, all forints spent will bear high interest rates, but not for our benefit. Thus, we spend many thousands of dollars to repay purchases that we no longer remember. No purchase is so important as to be worth the extra expense paid due to the high interest rate. A credit card is one of the credit products with the highest APR, meaning it is the most expensive type of credit.

4. We are comfortable

Sometimes it can be a pleasant treat if we order food to our house, or a necessary exception if we are in a hurry.

However, convenience purchases can quickly become routine and cost a lot of money.

Instead of the workplace canteen, home delivery, fast food, put together a basic menu and prepare a larger portion, which can be saved and frozen to save time and money. Frozen food helps on evenings when we don’t want to cook and we would pick up the phone to order a pizza or a little Chinese for dinner.

5. We spend on self-destruction

Yes, this includes drinking, smoking and gambling. But it also includes less obvious self-destruction, such as if we eat too much or are shopping obsessions. Anything that involves spending large sums of money while we know we can’t afford

Let’s stop with these bad habits and not only will our wallets be thicker, but we will also see a significant improvement in our quality of life.

Thanks for reading...