Being well-versed in personal finance is something we all wish we were good at. Unfortunately, with the massive amounts of debt that America holds as a nation shows that not everyone is that good at it. A lot of the issues come from people having bad financial habits that they simply do not know how to break.
Some of them are relatively harmless, while others could potentially be costing them thousands of dollars. With all of that in mind, this article is going to take a close look at 4 financial habits you should look to avoid.
1. Not Advancing Our Financial Education
One of the worst financial habits, which many people won’t actually think about, is not advancing or furthering your financial education or intelligence. If you don’t know right from wrong in terms of finance, you could be committing many mistakes, like the 7 money lies we tell ourselves.
If you don’t know a lot about finance, of course you’re not going to be able to save or stay out of debt as well. If you want to further your financial education, there are a number of different things you can do. You can take classes, learn from an expert or simply take advantage of one of the many websites out there aimed at increasing financial literacy.
2. Overspending and Using Your Credit Card Too Often
This is a very easy habit to fall into and one that most of us do from time to time. When you have a credit card, especially one with a relatively high limit, it can be easy to treat that card like cash and buy whatever you want. However, that is not a good idea.
Eventually you will have to pay off that credit card, and if you are unable to, the interest on the card will continue to mount, and soon, you may find yourself in a lot of debt. Instead, use your card only for things you need and things you can be sure you can afford.
3. Not Budgeting Each Month
Despite budgeting being a surefire way to get a better handle on your finances, not many people are dedicated to keeping an updated and accurate budget. A budget is a great tool as it allows you to track how much money you have coming in every month, as well as see not only how much money is leaving, but where it is going.
While having a budget used to be a bit of a process as you had to fill it all out manually with a pencil and paper, that is no longer the case. Now, you can use apps and various pieces of software to ensure your budget is always correct and up to date.
4. Not Saving and Investing Your Money
Unfortunately, this is a much more common mistake than it should be. Saving and investing money is something we are taught is a good thing a lot, but so few of us actually do it. Sure, there can be valid reasons for this such as low income or high expenses, but most of the time, we just forget or spend too much.
If you struggle with saving, try and identify why, and once you do, fix that problem. Once you have an emergency fund set up, you can look into investing if you want your money to grow a little bit faster.
In conclusion, if you can manage to avoid and/or correct these bad financial habits, you will be well on your way from improving your financial health.