Most people have routines in their lives and personal finance is one area where good habits should be developed while bad ones are eliminated. This may seem simple at first; however, modifying a behavior that has existed for five, ten, or sometimes twenty years is one of the most difficult challenges a person can face. Just because a task is difficult to do does not mean it is impossible. Here are some habits to stop that could help the average person have a better relationship with their money:
Not setting financial goals: Without clear financial goals, it is challenging to stay motivated and make progress. Imagine driving a car without a specific destination in mind. Not only does this waste money in gas, it also decreases the likelihood that the journey continues because it is pointless. Define your short-term and long-term goals and develop a plan to achieve them.
Impulse buying: Avoid making unplanned purchases on a whim. Instead, practice spending with intention and only buy things that align with your financial goals and priorities.
Failing to track expenses: Monitoring expenses on a weekly basis helps identify areas where a person can cut back and save more. Most banks and credit unions allow people to download their transactions into a spreadsheet. Budgeting apps can also help with monitoring spending. Having access to this information is worthless if it is not used to make your money behave.
Ignoring budgets: Stop neglecting budgeting or not having a budget altogether. Creating and sticking to a spending plan is essential for understanding where your money goes and making informed financial decisions. Imagine running a business and accumulating expenses without ever comparing that total to the amount of revenue being created on a monthly basis. This behavior is not sustainable. It never has been and never will be. Click here to download the GTB cash flow planning tools to Google Drive
Not saving for emergencies: Avoid the mistake of not having an emergency fund. This basic step in the journey to financial wellness is what prevents people from achieving their potential. Instead of aiming to save at least three to six months’ worth of living expenses to cover unexpected financial setbacks, set a goal to save one months’ worth of grocery. Repeat this process every pay period and prove how simple it is to achieve a four- or five-figure emergency fund balance.
Using credit cards in a random manner: Relying heavily on credit cards without a plan to pay off the balance each month can lead to debt and interest payments that keep going and going like the Energizer Bunny. Instead of getting excited about earning cash back or reward points, focus that energy on increasing income to ensure the balance is paid in full.
Not investing or saving for the future: Failing to invest or save for long-term goals like retirement can hinder your financial growth and security. Start early and contribute regularly to retirement accounts and other investment vehicles.
Ignoring debts: Ignoring debt or making only minimum payments can prolong your financial stress and lead to higher interest payments. Develop a plan to tackle your debts strategically. Reference the GTB Debt Blitz form in the cash flow planning tools.
Comparing yourself to others: Avoid comparing your financial situation to others. Focus on your own goals and progress. Most people only show you their spending habits. A person’s real financial truth can be answered with one question; How long can you survive without working for money?
Ignoring financial education: Personal finance is a lifelong learning process. Invest time in educating yourself about money management, investments, and financial strategies.
Breaking these habits requires discipline and consistency which everyone already has. The opportunity lies in replacing old bad habits with new positive habits like regular saving, investing, and budgeting. Over time, these changes will help build a strong foundation for better personal finance management.
