Habits to bust before beating debt

Habits to bust before beating debt

Bad habits can be tricky to beat. It feels as though they weasel their way into your behaviour and before you know it, they’re part of your life. But they don’t need to be impossible to get rid of. Replacing bad habits with good ones takes focused practice and consistent attention, but it can happen and can lead down a path of good future finances.

Here are four bad habits that will get in the way of good money practice if you don’t get rid of them:

Bad habit 1: Forgetting to budget

If you find yourself living without really knowing what you’re spending or where your funds from paycheck to paycheck, you might not have the best (or any) budget in place. The problem here is that if you don’t really know what’s happening with your monthly finances, you won’t be able to make appropriate decisions about how to spend or save beyond the monthly shopping. This can lead to bad debt if you’re not careful and it can be a slippery slope once you’re on it.

Good habit: Budget better

Take one or two months and look at where you use your money. Track your spendings and get a rough idea of how you can budget for the next month. Then create a monthly budget and think of it each time you want to spend money. Reference the budget before you make the purchase and if it’s not aligned with the budget, check back in later in the month to see if you can afford it. This will help you avoid making unnecessary purchases throughout the month which will help you save money and avoid debt.

Bad habit 2: Not a savvy saver

If you don’t have any savings as a backup, you could run into trouble if an unexpected expense comes up. Using credit in the face of an unforeseen payment coming up can lead you to debt quickly because it’s difficult to cater for your other expenses if you’ve used up your overdraft. It also makes it much more difficult to plan for the future and using credit for holiday planning can also be a dangerous strategy for your financial wellbeing. 

Good habit: Make slow saving a habit

Remember that budgeting point above? If you make saving a part of it, then you don’t even need to think about it. Start small and grow your saving month-by-month where you can. If you’re aware of your savings, you will get into better spending habits automatically. It’s a win-win-win and your future self will thank you down the line.

Bad habit 3: Spending over your earnings

If you are spending over your income coming in, you are going to be seeing debt creeping in. As debt creeps in, interest comes in to play. As interest enters, the debt increases and it becomes harder and harder to get out of. Unfortunately, it’s simple maths that leads to a complicated situation.

Good habit: Cut back on the unnecessary expenses

Start with the luxury things that you can live without. Clothing shopping that you don’t need, cut back on how frequently you dine out or order take-aways, go for fewer hair treatments and consider your budget with a conservative mindset.

Bad habit 4: Paying back debt inconsistently

It’s not a great strategy to try and pay debt instalments one month and ignore them the next. That’s one sure-fire way to get a bad credit score and get yourself into financial trouble without properly addressing the issue.

Good habit: 

Make debt repayments a part of your budget. If you can pay back your monthly installments consistently, you’ll be in a place where you can get debt out of your life and keep it out. If you are struggling to manage to pay your debt back, you might be over-indebted. If this is the case, we are here to help! Contact us and we’ll help draw up a strategy to help you get rid of debt once and for all. 

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