Bad financial habits can have an adverse effect on your life. Find out three steps to break those habits.
Some harmful behaviors, such as smoking, nail biting, or eating too much junk food, have a negative impact on our physical health. Others, on the other hand, have a negative impact on our financial wellness.
How do you tell whether you have bad financial habits?
Here are the three steps to break those habits.
1. Explore your relationship with money
Money relationships are complicated. It’s not always easy to spot financially unsound behaviour. However, there are some warning indicators you can look for.
Common issues include spending more than you earn, failing to establish an emergency fund, and failing to save for retirement. Taking a financial health survey might be a helpful starting step in identifying problem areas. However, our difficulties are not always the result of bad habits or poor decision-making.
According to many experts, it is critical to recognize the impact that systemic concerns can have in shaping financial health.
“Those are all structural concerns,” says Saundra Davis, founder of Sage Financial Solutions, a San Francisco Bay Area organisation dedicated to delivering financial services to low-income areas.
If you’re struggling with these kinds of systemic issues, your priority should be to find help. If your income should be adequate to pay your expenses but isn’t, Davis advises you to examine your conduct.
What decisions do you make on a regular basis, and what do you have influence over?
Search for patterns
When you’re bored or unhappy, you could shop online. Or you disregard your debt because it is too much to bear. Perhaps you have a tendency to squander windfalls rather than save them since your family did not highlight the necessity of saving when you were growing up. Emotions and experiences can have a significant impact on our financial habits.
As a result, even if you’re in fantastic financial shape, it’s possible to acquire bad behaviours. For example, a person who pays all of their bills on time and has a large savings account may yet experience worry about spending or dispute about money with their partner. You may begin to repair your unhealthy habits after you have a better understanding of what is causing them.
2. Establish personal goals
‘Where are you attempting to go?’ ask yourself. And where exactly are you right now? “How do you then bridge that gap?” Setting financial objectives can help you develop healthier behaviours. Alternatively, the goal could be to change your money perspective, such as becoming more mindful of your spending or becoming more comfortable talking money with others.
Make a plan that supports your financial health vision. Assume you wish to increase your emergency funds or make on-time credit card payments. Review your money once a month or every couple of months. Examine your budget and behavior to see if you’re on pace to meet your objectives.
3. Use resources effectively
It might be difficult to break bad financial habits. But you don’t have to do it alone.
‘Whether it’s journaling or having a chat with your partner or some other form of helping yourself feel secure again around the topic of money,’ says a financial expert, there are people and things you can turn to.
There are also a plethora of professionals available to provide assistance. A financial therapist, for example, can assist you in unpacking your financial relationships. Everybody has a financial history. You can also consult with a financial planner or obtain free guidance on budgeting, credit, and debt management from a nonprofit credit counselling agency.
Learn to advocate for yourself as you work to improve your financial habits.