Does your paycheck run out halfway through the month? Are you constantly trying to make ends meet and struggling to save? Time to tackle these bad habits.
3 Bad habits that are draining your bank account
Does your paycheck run out halfway through the month? Are you constantly trying to make ends meet and struggling to save? With our economy in trouble and the cost of living rising, it’s more important than ever to squeeze those cents. Unfortunately, it’s becoming increasingly difficult to do just that. Rising taxes, increasing food costs and sky-high fuel prices all make it very tough to cover everyday expenses – let alone put away money for the future.
Although the current economy isn’t much help to the finances of everyday South Africans, there are plenty of ways to gradually improve your financial situation. While small shifts won’t help you whip up a nice little nest egg overnight, relatively minor changes to your financial behavior will help you become more financially stable in the long run.
From setting up (and sticking to) a well-planned budget, to avoiding impulsive spending splurges, there are lots of good habits we can develop in order to stabilize our finances. For every positive behavior, however, there are bad habits we need to curb in order to attain financial stability. To help you watch out for these bad money moves, we’ve written a quick spotter’s guide to the bad habits which could be draining your bank account…
1. Impulsive spending
There’s something about impulsively spending money which can give you a real boost. Often described as a “buyer’s high”, a new purchase can make us feel happy, powerful, hopeful and excited. If we’re going through a rough patch, or simply feel bored, that rush becomes all the more seductive. Unfortunately, that happy feeling which strikes after an impulse purchase never lasts for long. Soon you have forgotten what you bought and why you bought it in the first place.
Tackling these behaviors is an important step towards stabilizing your finances. Unplanned purchases are very likely to blow your budget, or cause you to lose financial focus. Instead of splurging, set aside an allocated “fun” budget each month. This will help you to purchase more thoughtfully, without going into the red.
2. Letting bills stagnate
When you get your paycheck, it’s common to want to treat yourself to a nice dinner or Friday drinks. But ignoring your financial commitments is a very destructive financial habit. Before you spend your earnings on non-essential items, make sure you have repaid outstanding expenses first. That means your household bills, your rent, your school fees, your credit cards, your loan repayments. Ensuring these essentials are paid for first will ensure you don’t rack up late payment penalties. You may want to set up a separate account where you can keep the fund for these costs separate from your “daily pot”.
3. Not saving
If you’re not saving money consistently, you could find yourself in serious financial difficulty (or discomfort) in the future. It’s not easy to save, but if you can put away just a little money each month, you’ll steadily nurture a fund which you can use to cover emergency expenses, or use for things like deposits. If you’re renting a home, saving steadily for a deposit should be a priority. Homes are worthwhile financial investments which are much more cost-effective over the long term.
If you’re struggling to save, it may be time to downsize your lifestyle. Saving should be considered a key part of your financial plan, not an optional extra. Make space in your budget for saving by making economies such as moving to a more affordable property, taking local rather than exotic vacations and budgeting more rigorously.
To read more on topics like this, check out the money category