Do you ever keep track of how much you spend and where you spend it? Have you noticed a pattern in your spending? Money habits can be the reason we fall into financial uncertainty. 

Bad money habits can happen to anyone, especially myself. One year I spent a total of $600 dollars at Starbucks just on my credit card, which does not include the times I paid in cash. I could have saved that money for something more important than an iced caramel macchiato three to four times a week.

“The strongest thing in the world is a bad habit.” —Terri Guillemets

So what is a habit?

According to the Google Dictionary, a habit is “A settled or regular tendency or practice, especially one that is hard to give up”. Habits are done subconsciously. Sometimes they occur just by routine and sometimes they can be adopted from those around us. We all have a habit or two that we practice in our day to day lives.

A few bad habits include,

1. Failing to Budget
2. Paying for Unused Subscriptions
3. Overusing the Credit Card 
4. Impulse Buying
5. Emotional Spending

Failing to budget

Are you following a personal budgeting plan? Not having a budget can make it hard to save for the unexpected. It can also make it hard for some people to have enough for their expected monthly bills.

There is a lot to know about how to create and implement a budgeting plan. Most people forget about their habits when creating their budgeting plan. It is critical to take inventory of everything regarding your income and spending to create a realistic budget. 

When you are creating a budget make sure to add up all of your income and expenses. Make sure to include the random trips you make for fun. We all spend money on things we do not need.

For a step by step guide to creating a budget click here!

Paying for Unused Subscriptions

Do you know what subscriptions you are paying for monthly? Paying for unused subscriptions happens a lot to many people. We get in the habit of subscribing to random items and forget all about them. Not keeping track of our finances (income and expenses) can make it hard to stay on top of your budgeting plan.

Make sure to add up all of your subscriptions and include them into your budgeting plan and cancel them if they are no longer needed!

Overusing the Credit Card

Another bad habit that people adopt is overusing credit cards. A credit card is a nice thing to have for many reasons. It can help your credit score and make you look good to other lenders when applying for a mortgage or a new car. A credit card should be used consistently each month and paid off in full each month. However, a credit card can also create financial hardships. 

There are many reasons why a credit card becomes overused such as when our budgets increase, we face unexpected hardships, we become more comfortable with owning a credit card, and so many other reasons. Overusing a credit card can easily become a habit that is hard to break. Spending more money every month and not being able to pay it off in full can cause you to fall into debt and make it hard to qualify for other loans. 

Check out The Math Behind the Minimum: Calculating the true cost of credit card minimum payments, for a deeper understanding of making minimum payments.

Impulse Buying

Impulse buying is something we have all done at least once in our lives. You buy those 200 dollar shoes knowing that you did not need them. Impulse buying is okay to do now and then. However, when it is a constant action it can result in financial hardship. 

Impulse buying can lead to deeper spending habits such as taking money out of your savings account or not having enough money left for paying your bills. Make sure to “plan” for an impulse buy when creating your budgeting plan.

Emotional Spending

Do you find yourself going shopping when something bad happens or you have just had a bad day? A common way that most people deal with stress, anxiety, or depression is by spending money on things that make them happy. This action is known as emotional spending. Sometimes when we feel sad, buying a new blanket or new shoes makes us feel better. However, emotional spending can become a bad habit in the long run. 

Just like impulse buying, emotional spending is not included in our budgeting plan. We often use our savings or money that should be going to a main bill. This habit can cause financial problems in the long run because you are using money you do not have. Try to add a specific amount into your budgeting plan for emotional spending, just in case it is something you tend to do often.

Building good money habits that lead to financial success!

By adopting good money habits you are creating a path to financial success. Here are some good money habits you can learn,

1. Create a goal
2. Create a budget
3. Auto Transfer money into your savings account (make sure to make it a reasonable amount).
4. Plan out your shopping trips (create a list and stick to it).
5. Keep track of your financial process! 

Building good money habits does not happen overnight. Even small changes can make a difference. Changing your bad money habits will take some time, but implementing good money habits in your day to day life is a great way to start! Get started today!