10 Signs You Should Invest In Proper Financial Habits

Financial habits are essential for a 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.

Such practices need to be unlearned immediately. But as everyone knows, behaviour learnt over time is quite difficult to erase. The next best thing to do is to replace the wrong practice with the right one. In this article, we’ll discuss what habits are wrong, why they are wrong, and how you can change them for good.

1. What You Are Doing: Hoarding Money

Hoarding money means accumulating money, but not using it for any essential purpose.

Why Is It Not Recommended?

Hoarding money happens when one does not organise and keep track of their finances. This can also mean that one is scared of losing their 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 to anguish and psychological disorders if not curbed early.

What To Do Instead:

  • Have a purpose to save money.
  • Use the money for that purpose.
  • Do not save money just for the future, utilise it in the present for your own good.
    Put your savings in an account that will earn interest.

2. What You Are Doing: 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.

Why Is It Not Recommended?

This habit can prove to be a financial burden if one does not display self-discipline. It would mean that one is spending all their 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.

What To Do Instead:

  • Plan on the goods or gadgets while making a purchase.
  • Keep an eye on the market to purchase the necessary things at a discounted price.
  • Sell or give away any unused item or gadget.
  • Take the help of your family or friends to exercise self-discipline at all times.

3. What You Are Doing: Shopping As A Hobby

Usually, hobbies relax and de-stress us. Shopping as a hobby means shops when under extreme stress or pressure.

Why Is It Not Recommended?

Since shopping in such situations is usually done while one is stressed or emotionally down, most purchases would not be reasonable or sensible. Some even regret after making impulsive purchases. This 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.

What To Do Instead:

  • Prepare a schedule to shop.
  • Always go shopping with someone who is sensible and mature in making financial decisions.
  • Prepare a monthly budget for shopping expenses.
  • Do not overshoot your budget unless it is an important and necessary purchase.

4. What You Are Doing: Using Credit For All Purchases

This means using a credit line for all types of purchases. One can use a credit card or a personal loan for small purchases, such as buying clothes or for big purchases, such as home repairs.

Why Is It Not Recommended?

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. But 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.

What To Do Instead:

  • Set some money aside for emergency expenses.
  • Use those funds when required, especially as a down payment for a vehicle or a house.
  • Utilise the savings for home repairs or vehicle repairs.
  • Use a card or loan wisely, and ensure you repay them on time.

5. What You Are Doing: Spending Before Saving

This means one spends their income on all expenses and purchases as soon as they are

paid. The saving part would depend on the leftovers of their salary.

Why Is It Not Recommended?

This habit would mean no savings 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.

What To Do Instead:

  • Prepare a budget to save each month.
  • Keep aside the amount you decided to save as soon as you get paid.
  • Manage your finances with the rest of your salary each month.
  • Do not spend your savings on any unexpected expenses unless it’s really important and urgent.

6. What You Are Doing: Settling For A Steady Pay

This means that one is okay with the same job, same designation, and same pay for years just because the pay is steady and the work is comfortable.

Why Is It Not Recommended?

One 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.

What To Do Instead:

  • Use your current job to learn more useful skills.
  • Utilise those skills to move up the corporate ladder.
  • Look for ways and opportunities to earn more money.
  • Increase your savings as and when your income increases.

7. What You Are Doing: Managing Finances Manually

This means one usually pays expenses and makes purchases on their own.
Why Is It Not Recommended?

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 these things in time.

What To Do Instead:

  • Automate your payments each month.
  • Set up standing instructions for your card or loan repayments.
  • Pay your bills automatically from your bank account as soon as you are paid.
    Save on any extra charges that you may incur if you do not make payments on time.

8. What You Are Doing: Being Content with Low Living Standards

This means that one is using their income for unnecessary expenses and compromising on their daily needs.

Why Is It Not Recommended?

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 of your finances..

What To Do Instead:

  • Always try to better your living standards.
  • Do not compromise on health or basic needs for something irrelevant.
  • Set aside an amount to spend for your basic needs each month.
  • Find a middle ground between your needs and your wants.

9. What You Are Doing: Not Investing

This means the one just leaves extra money lying in their account without doing anything useful with it.

Why Is It Not Recommended?

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 utilised in a proper way. You need not take extreme risks, such as investing in a stock market or trying out a hedge fund. 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.

What To Do Instead:

  • Invest in a fixed deposit at a bank that offers high-interest rates.
  • Buy a life insurance policy that uses your premium on safe investments.
  • Open a savings account that earns you high-interest on your savings.
  • Invest in the stock market when you are more experienced in financial matters.

10. What You Are Doing: Having No Financial Goals

This means that one does not have any future goals regarding career, personal life, savings, and retirement.

Why Is It Not Recommended?

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.

What To Do Instead:

  • Create short-term and long-term financial goals.
  • Keep a time frame to reach such goals.
  • Work towards that goal each month within the decided time period.
  • Continue to improve and set new goals as soon as you achieve one.

Benefits Of Proper Financial Habits

Proper 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 good habits to lead a successful life.

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