We’ve all got them: habits that we are aware of, but that we don’t really want to break. If you’re one of those people, chances are you can also think of others, and they’re probably just as bad. In this post, we’re going to focus on the nine bad money habits that I’ve seen people fall into over and over again.
A personal finance blog is a popular place to share tips, tricks and advice on how to manage money and stay on top of your spending habits. It may include posts on budgeting, saving and investing, or tips on how to minimize credit card debt and manage debt more effectively. In this blog post, we will discuss nine bad money habits that people need to fix.
When it comes to money, we are all guilty of these 9 bad money habits. We all fall into the trap of spending, or living beyond our means. We don’t save enough, we don’t pay attention to the rules we’re supposed to follow, and we don’t make the most out of our money.
We all form habits based on how we have lived our lives. Some are good, some are bad. Bad money habits may not seem like a big deal at first, but if they persist for too long, they can cost you thousands of dollars. By being aware and making changes, you can easily improve your financial situation. These are the top 9 financial habits you need to fix. This article may contain affiliate links, which means I receive a free commission if you decide to make a purchase through my links. Visit this page for more information.
1. Non-use of cashback applications
What would you say if someone told you they were giving you money every time you spent money on things you were already planning to buy? Free cashback every time you :
- eating out / ordering takeaway meals / having meals delivered
- Shop at your favourite stores
- Buying gas for your vehicle
I hope you’ll say something like …. Absolutely! Show me the money!!! There are cashback programs for everything you buy! In fact, I’ve made over $200,000 using them over the years: Here are of my favorite cashback apps that I currently use. If you’re not using cashback apps, you’re leaving money on the table everywhere you go. Download these apps and make sure you use them every time you shop. Most offer a percentage back on the total amount you spend, sometimes there are bonus offers and additional discounts. Payout after confirming purchases doesn’t take long, so there’s no reason not to use it.
2. No credit or background check
If you don’t know your credit history, you are at a disadvantage. Check your credit history quickly and easily with Credit Sesame. A credit score is used when lenders decide to lend you money. This applies if you :
- apply for a credit card
- Mortgage Search
- search for a car loan
- Refinancing of student loans
- find an apartment for rent
A low credit score will cost you thousands of dollars because interest rates will be higher, landlords may not want to rent to you, and you may not be approved for a loan. If you check your credit history regularly, you will know if it is deteriorating and can take proactive steps to improve it. The higher your score, the more likely you are to get a loan with better terms. The sooner you review your credit history, the sooner you can make changes. A few small changes made quickly can make an almost immediate difference. Then, after a year or two, you can increase your score significantly if you are consistent. What changes will help you improve your credit? Pay your bills on time, live in the same place for long periods of time, and keep your credit cards open (this contributes to the average age of your accounts). These are just a few examples of actions that can make a difference and don’t require much effort.
3. Improper investment of savings
It hurts to see, because I know we work so hard for our money. If we saved a few, give yourself a pat on the back (or shoulder if you can’t reach it). It is a great success! Many people live from paycheck to paycheck and have trouble saving, even those who make $100,000 or more a year. That’s the situation Allison was in until she disclosed her personal finances (). But once you have the extra money, the big question is where are you going to use it – and that really depends on how quickly you need the money: If you need to keep all your money very liquid, you may be tempted to put your money in a savings account at a local bank, but it is unlikely that you will earn interest at the 0.00000001% rate they offer. There are banks that pay 10 times more interest than the national average. Why settle for less when you can easily earn more? Make your money work for you.
4. Unpreparedness for emergencies
We all think it won’t happen to us… and then it does. Our car breaks down, we have medical emergencies, hurricanes damage our home. All of these things are stressful, costly and unavoidable. At some point you will need an emergency fundand not being prepared can cost you dearly. I recommend having at least six months in your emergency fund. (Infographic provided by NinjaPiggy.com) Although 6 months of savings is a lot of money, don’t despair. We hope you never have to use it, but if you do, you’ll be very glad you did. In an emergency, you may need to incur debt to restore your health. If there’s another emergency, you can’t do it. It’s a slippery slope, and many Americans are one paycheck away from becoming homeless because we’re not ready. Confidence in employment is not as high as it was in our parents’ generation. In fact, many people work multiple jobs to make ends meet. What happens if you lose yours? Could you survive? You don’t want anything unfortunate to happen, and at the same time you have to worry about money – it’s an extremely stressful situation. Find out how much emergency savings you need and how to achieve it!
5. High interest payments on debt
When we first go into debt, we often have no idea. High interest loans were common because they were easy to obtain, just like credit cards. In college we live off that debt, and then we graduate and see how expensive that bad habit is. With high interest rates, it takes years to pay them off. How can you succeed if you are paying more interest than you actually owe? Stop paying such high interest rates on your debts! You should refinance as soon as possible if the interest rate on your loan is between 10% and 20% (I hope it’s not above 20%). Less than 10% is better, but it’s not a big. Ideally, you should have a percentage of less than 5%. SoFi is a great place to refinance student loans, credit card debt, and personal loans. You can refinance your loans at very competitive rates and save thousands of dollars. As a bonus, they’ll even give you $300 if you decide to refinance with them.
6. Mortgage refinancing remission
Mortgage interest rates have never been this low. As always. If you own a home, now is a good time to refinance your mortgage. A price difference of only 0.50% is usually enough to make the transaction profitable. With interest rates this low, you’ll probably notice a much bigger difference, especially if you haven’t refinanced in a while. Read this post to easily find out how much you can save by refinancing and what your own break-even point is. So how do you easily find the best rates without having to fill out tons of applications? I prefer to useCredible(NMLS #1681276) for this purpose. Credible lets you comparelenders in just 3 minutes. You get real rates from multiple lenders without your credit history suffering. Unlike other online sites, you won’t be bombarded with emails and phone calls.
7. Non-use of compound interest
The power of compound interest works both ways. Bad debts keep you in debt longer. In the case of a savings account : The sooner you use it to your advantage, the more you will have later. Compound interest works by adding interest to interest. For example, the amount you keep in the savings account earns interest. Save that amount plus interest, and the next time the savings plus interest will yield. In the beginning, these are small amounts, but after a few years, the amount of interest paid becomes larger and the amount of money in your account increases faster. Not using compound interest is like throwing money away. Interest on interest is fantastic free money!
8. Is not planning to retire
Many people think that retirement is still so far away that they don’t need to think about it. Without a retirement plan, you are doomed to financial failure. Without retirement savings, you have no money to live on. The sooner you create a retirement plan and begin implementing it, the more effective it will be. Bond funds use compound interest to your advantage. Plus, many employers double your contributions. So if you contribute to your 401k plan and the company contributes a certain amount, you get free funding. If you don’t deposit, you’re wasting money. Even if you won’t see money until you retire, it’s worth planning now and doing what you can to maximize your retirement income. If you don’t have a 401k plan, you should open a traditional IRA or a ROTH IRA. Or, if you’re lucky enough to have both options, I’ll help you decide between a 401k and an IRA.
9. Emotional expenses
Like emotional eating (which can be expensive and unhealthy), emotional spending is a bad habit that’s hard to break. Spending money because you’re stressed or can’t handle what’s going on in your life isn’t the answer. Find another hobby to fill the void. Join a gym and use it to run errands. Meet a friend and take a walk in the park. Go fishing, do crafts, start a newspaper. Find a way to stop yourself from spending money recklessly and seek professional help if necessary.
Bad financial habits can cost you thousands of dollars a year if you let them. They will probably be compiled as well. For example, you have an urgent need but no emergency fund, so you put money on a credit card with a high interest rate. Now you’re so stressed that you start spending money emotionally. This can quickly turn from a small problem into a very important and costly one. Before you know it, your personal finances are out of control. By making a few simple changes and being aware of your money and where it goes, you can make better decisions and save more money.Money is a powerful force that can change your life for the better or for the worse. And so it’s important to make sure you’re managing it in a way that will help you achieve your financial goals, and not hinder them. While there are many different ways to approach money management, there are some common money mistakes that many people make. So, if you’re ready to make some big money changes in your life, here are nine bad money habits you need to fix.. Read more about positive money habits and let us know what you think.
Frequently Asked Questions
What are some money habits?
We all make mistakes. We all have blind spots. We all have habits that we’ve picked up over time that may not be in our best interest. We all have money habits. So, here are some of the biggest ones you should be working on. There are two types of people in this world: the ones who save money and the ones who spend it. If you’re the latter, read on. One of the most basic, yet often overlooked, habits of all is saving money. Whether you’re just starting out in the world of finance or are looking to improve on your finances, it is good to have a basic understanding of money-saving habits.
How can I turn my bad habits into money?
Whether you’re looking for an extra source of income or trying to live a more frugal life, there are certain money habits that may be holding you back. In this post, I’ll talk about nine money habits to avoid. Why do we spend so much money on things we don’t need? Why do we spend money we don’t have? Why do we spend money on things we say we want but don’t need?
What factors have the most negative influence on money habits?
Money habits are like habits in general. The good news is, bad money habits are actually easier to change than good ones. If there are some money habits that are hard to change, it’s not because they’re really hard to change… it’s just that they’re easy to ignore. We all know that having a healthy money habit can help us live a more financially secure life. But what exactly are money habits and why are they important? A person’s money habits are the mental and physical actions and behaviors that enable them to manage their money. Most often, these behaviors are unconscious, but they are influenced by mental and emotional states.
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