As the new year approaches, most of us will be buying gym memberships and perfecting meal plans in order to ensure that this time around, our resolutions will stick. Why not resolve to overhaul your financial situation, instead of your body, in the new year?
If you want to earn more, a good place to start is with your habits. With that said, breaking the bad ones is just as important as establishing the good ones. Here are some bad money habits you should aim to break this year.
- Set a Budget: Setting up a budget is probably the most basic yet most important financial advice. You may have observed that people often are surprised to see their bank balances so low at the end of every month. Usually, people avoid budgeting because they don’t know where to start. Fortunately, creating a reasonable budget doesn’t have to be difficult. Creating a simple budget by adding up your total recurring expenses, setting aside a certain amount for savings, and splitting up the rest between categories like eating out and entertainment isn’t a difficult task. Alternatively, there are plenty of budgeting apps that analyze your spending habits and create a budget for you.
- Impulse Buying: This is a rather smart concept or a strategy used by stores (usually grocery stores) to lure customers into buying things that they don’t really need. You know what they say “Never go grocery shopping with an empty stomach”. Stores are laid out to get you to spend more money – from grocery stores to clothing and furniture stores. Impulsive buying can be curbed using simple steps. When you go to the store, it’s always a good idea to bring a list with you. Also, you should carry only the required cash when you go out so that you only buy the things that you need, which means, leave your card at home. Once you’re able to stop making those impulse buys you’ll see your savings add up and that it’s easier to manage your finances.
- Cancel the Unnecessary Subscriptions: People often tend to subscribe to a bunch of products and services causing a burden to your own savings account. The idea here is to be truthful to yourself and decide on what you really need and what you don’t. For example, If you have a gym membership and you’re not going, cancel it. If you’re busy with work and don’t have time for Netflix and chill, let it go. Take inventory of all your subscriptions that are regularly withdrawing money from your account and cut a few of them out if you can.
- Investing: Many of us have taken measures in order to save and control our finances. But, the process shouldn’t end there. Investing is critical if you want to build wealth — it’s how the rich get richer. If you have a fear of investing because you’re afraid you might lose it all, that’s irrational. As long as you invest wisely and diversify, you will have nothing to worry about. Diversifying is as important as Investing. Putting all your eggs in one basket is not a wise choice. It’s always better if your money is spread across multiple investments, including stocks and bonds.
Self-motivation can go a long way towards achieving your goals, but the truth is sometimes we fall short despite our best efforts. Just take it down to the basics – live within your means, avoid consumer debt and save for the future. Using the methods listed above is a great way to get started on breaking your bad money habits and improving your financial stability in the year 2020.
