Bad saving and spending habits are really tough to break.
Even if you are eager to save a little more for retirement or stop splurging on credit cards, you may end up being impulsive and get back to your old routine.
You must develop good spending as well as saving habits.
If you are not very careful about money, you end up having the same problems or it may turn worse down the line.
A few financial behaviours endanger financial future, making it tough to manage money down the line. Here are a few such behaviours outlined.
Not Maintaining Budget
Money management can be very difficult if you do not maintain a budget.
Your budget offers a way to know how much you can afford to spend and how much you end up spending in reality.
Without a budget, you will end up overspending and have a tough time saving money.
You probably know people lending money to siblings, friends, and so on.
Generosity is certainly a virtue but personal loans can bring you losses.
If you are lending money, you can set a repayment plan. Make sure to mention the deadline.
However, the best decision is, avoid lending money.
Making Late Payments
There is much more to making late payments apart from just paying extra money.
Missing payments can also lower your credit score, thereby affecting your ability to borrow for bigger purchases like a home or a car.
What about setting up automatic payments for the fixed charges like internet, cable or insurance?
Using Credit Cards to Gain Points
All reward credit cards are not bad.
If you can use them responsibly, they definitely enjoy a secure place in your wallet.
But, the credit card companies offer the reward points on purpose and this is certainly not out of sheer goodness.
Rewards encourage you to spend more.
Though you score a cash amount, a number of cards impose significant restrictions and you may not even get back as much as you think.
It is not prudent to get deeper into debt in pursuit of the reward points.
Not Having Saving Goals
Money does not appear out of nowhere. To save more, you must have a clear goal and a specific plan.
Determine the major purchases you want to make in the future. Next, find out how much you need to save for that.
Set up recurring automatic transfer to your savings account to save consistently.
Spending More Than You are Earning
If you are spending more than your earnings, you are slowly drifting towards financial failure.
You can never manage money if you have this habit.
You will not just face hardships saving for the future, but you also run the risk of ending up in debt.
Not Having an Emergency Fund
You must have an emergency fund so that you are well prepared in case an emergency strikes. If you do not save money and have an emergency fund, you may end up borrowing money, landing up in a debt.
Though you can always develop better financial behaviours with time, the best way is to attempt that now. If you wait too long, you risk continuing with poor money management skills.