3 Habits That Are Ruining Your Financial Health
Habits are powerful tools since they impact on our way of thinking and influence our actions. While some habits are good, others are destructive and can lead to your downfall. When it comes to money, habits can make or break your personal financial success.
Bad financial habits will place significant barriers between you and your financial freedom while good habits can help you build substantial savings and live a life free of financial stress. Bad habits will drive you deep into debt and make your life miserable, living from paycheck to paycheck. Here are the top three bad habits that are ruining your financial health.
Paying the Minimum Amount towards Your Debt
Most of the time people prefer to pay just the minimum amounts due on their debt such as student or personal loan. While it’s good to ensure that you pay your bills on time, paying the minimum amount towards your debt is going to cost you more interest. In simple words, paying the minimum amount due every month means that you will pay the maximum possible interest over the duration of the loan.
Keep in mind that every single dollar you add to the minimum amount every month saves you interest on the remainder of the loan. Target the highest possible amount that you can afford since the faster you pay the loan, the less interest you pay and the sooner you get yourself out of the situation.
Failing to Budget
It is almost impossible to avoid financial disasters if you don’t have a budget. Typically, a budget helps you decrease or prevent a debt. It will also help you build and sustain savings to help you in case of an emergency. Apart from protecting you, a budget also offers you a precise roadmap on how to attain your financial goals.
Not having a budget is like throwing your money by the roadside and hoping that you will pick it the following day. The best way to build a budget is by tracking your expenditure for some time and take time to understand how much you have coming in and going out.
In other words, you are spending money on things that you don’t need or never planned to buy in the first place. This is a significant problem that affects a lot of people, and it is one of the worst habits to have. Impulse buying usually leads to regret or debt.
How many times have you been out somewhere, see something, and all of a sudden it seems like you must have it only to realize later on that you don’t need the item? Before you buy anything, ask yourself if you really need it and whether it adds any value to your life. Always be slow to purchase if you want to make better purchase decisions. Don’t allow your emotions to think for you when making a purchase. Following these tips will help your financial health.