Bad Money Habits You Need to Break this Year
It’s a new year. For some that means a time to set goals to achieve in the new year. However, many of us are hesitant to set goals we feel we may not be able to achieve at year’s end. It’s no fun to set yourself up for failure. And that’s a fair take. If resolutions aren’t your thing, you can still think of ways to improve your life, new year or not. Instead of thinking of things you need to do, simplify it! Just think about things that you can stop doing that can enormously benefit your financial health. Here are some bad money habits you should aim to break this year.
Stop making only the minimum payments
It’s tempting—you owe $600 on your credit card this month, but your minimum payment is only $25. The $575 you would save by only paying the minimum could go a long way. But, there’s a downside. Now you owe interest as well as your remaining bill. In the new month you must decide again—pay the higher amount or just the minimum payment. It’s a tough pattern to break, but it’s crucial. Your debt will only continue to pile up and become increasingly unmanageable.
Resolve to pay down credit card debts as much as possible in the new year. If you can’t pay the full bill in one month, that’s OK! But, make reducing the bill a priority. Devote as many of your financial resources towards your bills as you can. By paying as much of your bill each month as you can (and resisting the urge to increase that bill), you’ll eventually pay it down. And, your financial health will be better for it.
Stop neglecting your savings
You know setting money aside every month is a good habit. And, you know what a lifesaver that money can be in a financial emergency. And yet, with each new paycheck there are too many other priorities. So, your savings is neglected for another month. Make 2019 the year you prioritize your savings. Make a conscious effort to set money aside every month. The money you would normally use on lunch or a latte—save it. Keep saving it and putting towards savings. Make other small cuts like a smaller cable package. Save that money too. Before you know it, you’ll have a sizable fund set aside for emergencies, past due debts or other goals!
Stop relying on credit
Do you use credit like a crutch? It’s easy to do. It’s there, even when the funds in your checking account are not. Unfortunately, that’s a recipe for crushing credit card debt! Stop relying on credit this year. If you can’t afford to pay it back right away, you can’t afford it. Find ways to ween yourself off your credit cards. Use it for emergencies if you must, But, don’t overuse it!
Stop neglecting your budget
You know the benefits of a budget. You know it can help you avoid debt or overspending. But when it comes down to actually setting a budget each month, it feels like too much work. So, you wing it. This year stop winging it! Plan how you’re going to spend (and not spend) your money. Spend a few moments every month taking stock of your previous month’s income and expenses. Then, project your expenses for the coming month. Categorize these expenses based on their priority. Cut anything deemed a low priority. For more tips on creating a budget you can actually stick to, click here.