Bad Financial Habits that Could Affect Your Future
Bad Financial Habits that Could Affect Your Future
“Live life king-size” some people have taken this philosophy so seriously that it often leads them to all sorts of financial problems. The situation at times gets so much worse, that even the emergency funds are not enough for debt consolidation. The fact is that people like to make the most their present time; however, deep down under, they are also worried about the future. As of now, no one is aware of any magical potion that guarantees a stable growth, but there are some bad money habits that one should avoid right away for better financial stability in the future.
Mentioned below are all such bad financial habits and some tips from experts on how to deal with them. Have a look.
Being a Shopaholic
When on a shopping trip, do you buy stuff other than the ones on your list? Sometimes even more than what your pocket permits? If yes, then consider dropping this habit of compulsive and mood-based buying right away as it at times leads to overspending. Especially amongst millennials, the urge of shopping is so much that they don’t mind swiping their credit card for personal buying. Also, managing finances can be a tedious task for shopaholics, but by eliminating this practice, they can lead a peaceful and financially-sound life.
Tip: All those who are persistent about their shopping spree can create a budget and figure out the money they’re taking off for shopping.
Relying solely only on savings accounts
Creating a savings account is essential, but it shouldn’t be the only option. Seek financial assistance and ask about various investment options that ensure a sky-high return without risking the loss of principal amount. Apart from the savings account, consider investing in some high-interest terms deposits as well. All these schemes might not provide instant benefits, but in the next ten or twenty years, you could have a small fortune. Saving money through different and safe investment schemes is a good habit to develop.
Tip: Get in touch with financial institutions and ask more about tax saving schemes.
Settling in for risky investments
Whenever an investment vehicle offers a high rate of return in a short period, investors know—somewhere in the back of their minds—that investment is risky. However, the fact remains that investment products that provide a high return and low risk don’t exist. Taking risk is a part of the investment, and there is no harm in investing money, but you can opt for a relatively safer option such as fixed deposit and mutual funds for investment.
Tip: If you’re one of those who run by numbers, then consider depositing a percentage of your income in risky investments, not the entire salary.
Not guarding your savings
When was the last time you updated your bank account? Surely, that must have been ages. The golden rule of building a bright future is to save money. Some of you might not be able to do so, all thanks to your lavish lifestyle. But not maintaining your account might end you up in jeopardy as it acts as an emergency fund. A day might come when you have to pay a down payment, and you probably would have wished to save more.
Tip: Get in touch with your bank and ask about tax-saving schemes that will help you to save more and get better returns.
Spending more than your income
Lifestyle inflation is something that eventually happens as you grow up—you achieve better financial stability. A job or a raise may affect your earning power but then who are in debt may end up being a debtor for life and spending more than your income. You should always spend considering your income, and if you’re not doing so, you might burn your future finances. Spend what you can afford to maintain your valuable financial freedom.
Tip: Be aware of what you need.
No debt planning
Let’s address the elephant in the room. What will you do if one day your boss calls you and says that you’re no longer a part of the company? For sure, this statement might give you some jitters as you might be under a pile of debts, but as they say, one should always prepare for the worst. However, to make situations like this less overwhelming, you can make a proper debt plan. Write down all your debts on a sheet and start paying off the ones with the minimum amount. You can even consider opting for secured yet fast small cash loans that are available at the low-interest rate for debt consideration. It is a kind of debt only, but they come with customizable repayment terms. Eventually, you will see balances going down and accounts being close, motivating enough to keep going.
Tip: You should have an emergency savings account to face any unforeseen financial crisis.
Bonding up with your credit card
Just because you’re getting benefits and rewards in return, it doesn’t mean that you should use your credit card each time to purchase something. All those fancy cashback may be lucrative enough for you to swipe your card, but then that comes at the cost of annual caps, heavy restrictions and charges. The worst part is yet to come! God forbid, if you don’t pay your bills on time, you will not only end up shelling out extra money as fines but also getting a bad credit score, which might affect your loans requirements if there are in future.
Tip: Even after mapping out all the pros and cons, you’re still persistent about a credit card then lookout for a card with a less interest rate. This way, when the worst time comes, you might not use your savings to pay off your debt.
Want a big house? Start a company? Or take a year off to travel the world? If these are your goals, then the high time you should use your savings to pay off your debts.
