Your future financial situation is tied to your habits. It is almost everyone's dream to not be troubled by money, but most office workers are still worried about financial management. If this is the case for you, you might as well re-examine yourself now and quit bad financial habits to take back control of your money.
Bad financial habits are like a toxic relationship.
You know you should break up with him, but you hold on tight.
But the question remains - why is it so hard to break out of these destructive financial habits?
Sometimes we know nothing about them, and sometimes we are afraid to face the unknown. But wouldn't we be able to stand it without these habits? Can't we live without a Starbucks once a week?
I know a thing or two about money matters. I also lost all my money a few years ago due to a stupid financial mistake.
But I also learned that quitting some bad spending habits is actually a lot easier than you might think.
In fact, you can save yourself hundreds (or even thousands) of dollars a year by quitting these three common financial habits.
1. Procrastination on financial decisions
I always procrastinate when I need to make an important financial decision because I'm afraid of making the wrong choice.
I would spend hours browsing the web for articles and videos on personal finance, trying to train myself as well as possible before taking action.
But inevitably, by the time I was ready to make a decision, the opportunity had passed and I had missed it.
I've since learned that procrastinating on financial decisions is one of the worst things. It keeps you from taking advantage of those opportunities, and it makes you miss important information that could help you make the right decisions.
If you are also procrastinating making financial decisions, ask yourself two questions:
Are you afraid of making the wrong choice?
Are you worried about the consequences?
Once you've identified where your fear spots are, you can address them. Depending on your needs and goals, there are many great investment options.
For example, if you're looking for a short-term investment, consider opening a high-yield savings account.
If you're looking for long-term investments, consider stocks, bonds, or mutual funds.
Investing can be scary, but there's no need to delay making a decision about it.
The sooner you start, the sooner you'll see results.
2. Not diversifying your income streams
When life hit me hard, I learned the importance of having multiple income streams.
I used to rely on only one source of income.
I live on a paycheck and don't have much savings for a rainy day. When the pandemic hit and I was suddenly laid off and lost my income, I was stuck.
This has taught me the importance of having different sources of income so that if one goes down, I have other sources to fall back on.
Start increasing your income stream.
Having multiple income streams is important for two reasons:
It can provide you with a buffer if one of your sources of income goes down.
It can help you grow your income faster.
Best of all, you don't need to go to great lengths for this.
If you want to have multiple income streams, then you need to consider what skills or assets you have that you can profit from.
For example:
Do you have writing skills? Then you can start a blog, make money with ads, or become a freelance writer. (That's my choice. When the time came, I quit my 9-to-5 job because my side hustle was already generating more income for me and I could develop multiple income streams from it).
Do you have a house that you can rent out?
Or do you have a car that you can use for your ride-hailing business?
There are many different ways to make money, so take some time to brainstorm and see what you can do.
Remember, it's never too late to start!
It might take a little more work at first, but it will be worth it in the end!
3. Spending consumption habits
Growing up, I always liked eating out and spending money on new clothes.
As a result, I quickly developed the bad habit of overspending on entertainment and unnecessary luxuries, and it was inevitable that I would not be able to make ends meet each month.
But thankfully, I was able to recognize my bad spending habits and develop a plan to correct them.
If you're struggling with overspending too, here are a few tips to help.
1. Follow the 50:30:20 rule
50% of income is used for basic expenses/needs: eg rent, insurance, utility bills, groceries, etc.
30% of your income goes to things you want: e.g. dining out, gym memberships, entertainment.
20% of your income goes towards saving and paying down debt.
2. Delay your gratification
Wait at least one to two weeks before purchasing any non-essential items online or offline. If it's really needed, it's still there. If it's just something you want at the time, it will gradually disappear from your life.
3. Don’t do window shopping
My psychologist friend told me: Window shopping is more dangerous than you might think (window shopping means just wandering the streets without buying anything). When your body touches an object, the brain is tempted to take pleasure in it.
So you end up buying something you don't really need.
By doing these three things, you can break the cycle of overspending and get your finances back on track.
Now you know the three most common bad financial habits that can wreak havoc on your savings.
But don't worry, these habits can be changed.
All you need is the conscious
improvement and small steps you can take to get yourself back on track.
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