A new year is upon us, along with opportunities for new beginnings. Now is the perfect time to make some big changes in your financial habits. No matter how much you make from your job, some tweaks in the way you handle your monthly salary can go a long way in easing your money situation.
One good way to change your financial habits is to work your way backwards from your typical missteps. Many New Year’s Resolutions involve the correcting of negative behavior, and improving your personal spending habits is no different. Here we go over some common financial mistakes you should work on fixing in the next twelve months.
1. Living beyond your means
Be critical about your needs versus your wants. By being honest about your spending habits, you can set boundaries and more specific financial goals for yourself.
2. Comparing yourself to others
Another common cause of money mismanagement is “keeping up with the Joneses.” Insecurity or peer pressure could drive you to make out-of-character purchases just for the sake of keeping up appearances. Focus instead on what works best for you, and remember that other people could be repeating the same financial mistakes you are avoiding.
3. “Budget? What budget?”
Short-term thinking is the downfall of many when it comes to money. Without a well-planned budget, you could end up living paycheck to paycheck with nothing left over for the future. Do an inventory of your bills, debts, and other regular expenses. Afterward, divide your income toward fulfilling these financial obligations, and prioritizing more time-sensitive payments.
4. Leaving impulse buys unchecked
Yes, this applies to those seemingly small and negligible purchases you make every time you’re at the mall. Even if all your spur-of-the-moment buys run cheap, making a habit of giving in to your impulses could have a huge impact on how you budget your daily expenses over time.
5. Borrowing too much money
Living independently from others makes you think smarter of where your money goes. If you must borrow money, stick to personal loans by banks and legitimate lending institutions because they have formal documentation which can help you when tracking your monthly expenses.
6. Lending too much money
On the flip-side of the debt question, almost everybody has that one friend or relative who always borrows money without paying it back. As harsh as it sounds, sometimes you have to exercise a little tough love by saying “no.” This is doubly important when your own finances are in a precarious position.
7. Missing credit card payments
This can be done by not spending beyond a one month’s paycheck. Start small by not missing a deadline, and follow this through by paying more than the minimum amount after.
It would be wise to compare credit card interest rates, annual fees, and features to find the credit card that suits your needs if you’re just about to get your first credit card. This will help in avoiding bad debt.