Best financial habits are essential for your stable financial standing. In fact, there is no right time to start such practices. But there are some situations that call for proper habits on an urgent basis. Usually, it’s when you have developed a lifestyle that can inhibit your financial life.
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Such practices need to be unlearned immediately. As a matter of facts, everyone knows, behavior learned over time is quite difficult to erase. The next best thing you can do is to replace the wrong practice with the right one.
In this post, you’ll come to know the best financial habits. Moreover, you’ll aware of what habits are wrong, why they are wrong, and how you can change them for good.
1. Hoarding Money
Hoarding money means accumulating money, but not using it for any essential purpose. It happens when you do not organize and keep track of their finances. This can also mean that you are scared of losing your money, hence the accumulation without any purpose.
This habit can cause you to worry unnecessarily and can obstruct your ability to make sensible decisions. It can even lead you to anguish and psychological disorders if not curbed early.
Instead of that, you must have a purpose to save money and use the money for that purpose. Do not save money just for the future, utilize it in the present for your own good. Moreover, you can put your savings in an account that will let you earn interest. Saving money is, in fact, one of the best financial habits.
2. Chasing New Goods
Chasing new goods means keeping a watchful eye on the market, and purchasing all the latest goods and gadgets as soon as they are available.
This habit can prove to be a financial burden if you do not display self-discipline. It would mean that you are spending all your hard-earned money just for pleasure and entertainment purposes.
It will not only leave you with unnecessary goods that you may use rarely but also would ensure minimum or no funds for taking care of any important or urgent need.
So, plan on the goods or gadgets while making a purchase is also one of the best financial habits. Keep an eye on the market to purchase the necessary things at a discounted price. You can sell or give away any unused item or gadget. Furthermore, you can take the help of your family or friends to exercise self-discipline at all times.
3. Shopping As A Hobby
Usually, hobbies relax and de-stress us. Shopping as a hobby means shops when under extreme stress or pressure.
Since shopping in such situations is usually done when you are stressed or emotionally down. In fact, most purchases would not be reasonable or sensible in such a situation. Some even regret after making impulsive purchases.
This kind of habit could drown you in debt and extreme stress rather than helping you out. It can even lead to depression and emotional breakdown in the long run.
So, to avoid being in that situation prepare a schedule to shop. Always go shopping with someone who is sensible and mature in making financial decisions. You can prepare a monthly budget for shopping expenses. However, never overshoot your budget unless it is an important and necessary purchase.
4. Using Credit For All Purchases
This means using a credit line for all types of purchases. You can use a credit card or a personal loan for small purchases, such as buying clothes or for big purchases, such as home repairs.
A credit line means a debt that you have to repay. Whether it is a credit card or a personal loan, you have to pay an additional sum as interest along with the principal amount. For small purchases, a credit card can be quite useful, and you can also maintain a healthy credit score when you use it wisely.
However, for bigger expenses, any credit line would be a huge sum. If you miss even one payment on your card or loan, you will incur extra charges where your credit score may take a hit.
It is better to set some money aside for emergency expenses. You can use those funds when required, especially as a down payment for a vehicle or a house. Moreover, you can utilize the savings for home repairs or vehicle repairs.
So, use your credit card or loan wisely, and ensure you repay them on time.
5. Spending Before Saving
Spending before saving means you are spending your income on all expenses and purchases as soon as you get paid. Normally saving part would depend on the leftovers after your expenses.
That means no savings at all in each month. Since some expense will crop up, you may find yourself broke by the middle of the month. All you would do is wait for the next pay to meet other expenses.
This can lead to missing out on important needs due to lack of money. It can also mean that you would not take proper care of yourself due to minimal or no funds.
So, before you spend, prepare a budget to save each month. You can keep aside the amount you decided to save as soon as you get paid. Manage your finances with the rest of your salary or income each month. Apart from that, do not spend your savings on any unexpected expenses unless it’s really important and urgent.
6. Settling For A Steady Pay
Are you okay with the same job, same designation, and same pay for years just because the pay is steady and the work is comfortable?
If it so, then you should always look for opportunities to grow in life, financially or otherwise. You cannot expect a stable financial standing if you are compromising financial prospects for staying within your comfort zone.
With the rising costs of living standards all around the world, you cannot possibly meet all your needs without any career or financial growth.
So, to overcome it, you can learn more useful skills from your current job. You can then utilize those skills to move up the corporate ladder. Always look for ways and opportunities to earn more money. In the end, increase your savings as and when your income increases.
7. Managing Finances Manually
This means one usually pays expenses and makes purchases on their own.
Managing your finances on your own would mean that you need to remember every expense and bill. You have to pay your rent or home loan before the due date is over.
You have to pay the electricity and water bill before the connection is cut off. If by any chance, you fall sick or encounter an unexpected situation, you would probably not remember all these things in time.
You can automate your payments each month instead of managing your finances manually. All you need is to set up standing instructions for your card or car loan repayments. Furthermore, you can also pay your bills automatically from your bank account as soon as you are paid. In fact, it also lets you save on any extra charges that you may incur if you do not make payments on time.
8. Being Content with Low Living Standards
Being content with low living standards means you are using your income for unnecessary expenses and compromising on your daily needs.
Low living standards would mean not spending on basic needs due to lack of funds. You could be buying the latest product on the market, and yet living in a small house. Or, you may continue to reside in an economical area to save money, but that place may not have proper sanitation measures.
You may spend money on shopping, but not spend on your health. As you spend all your income on your wants, you end up compromising on your needs. This practice might put a dent in your finances.
So, always try to better your living standards and never compromise on health or basic needs for something irrelevant. You must set aside an amount to spend for your basic needs each month. Moreover, try to find a middle ground between your needs and your wants.
9. Not Investing
This means the one just leaves extra money lying in their account without doing anything useful with it.
When you get sufficient income to support your monthly expenses and add to your savings, not investing it is like wasting that money. Money does not serve any purpose when it is not utilized in a proper way. Utilizing, your hard earned money in a proper way is one of the best financial habits.
You need not take extreme risks, such as investing in a stock market or trying out a hedge fund. Even, you can try something simple, such as a fixed deposit or an investment-linked life insurance policy. These products will earn you returns on your savings as well as protect your investment capital.
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So, better you start investing in a fixed deposit at a bank that offers high-interest rates. You can buy a life insurance policy that uses your premium on safe investments.
Furthermore, you can open a savings account that earns you high-interest on your savings. If you are a risk taker, then you can also invest in the stock market when you are more experienced in financial matters.
10. Having No Financial Goals
This means that one does not have any future goals regarding career, personal life, savings, and retirement.
You may find it easy not to bother much about the future as long as you have a job that pays you on time. But this attitude may prove to be detrimental when you encounter unexpected situations, such as loss of your job, family issues, medical emergency, or retirement.
Unless you are prepared for such situations, you can never cope with them or overcome them. You may end up losing more than you ever imagined.
So, create short-term and long-term financial goals and keep a time frame to reach such goals. Keep working towards that goal each month within the decided time period. You can continue to improve and set new goals as soon as you achieve one.
Benefits Of Best Financial Habits
Properly implementing best financial habits will equip you to meet and improve your personal and professional life as you grow older. You can face any situation poised and ready. You will never have to struggle to know what to do when.
These habits will not only help you but also your family members and friends who will imitate your self-discipline in their lives. Cultivate best financial habits to lead a successful life.
At bbazaar.my you can find practical assistance to help you plan your financial goals. Whether it is a personal loan, or a credit card, or a life insurance policy, you can find detailed information that will help you make wise decisions.
So, are you adopting best financial habits in your life from now on? You can share your views in the comment section as well. That will also motivate others and live a worry-free life.
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Published on: 14 Aug 2018