7 Bad Habits That Defeat Your Personal Finance Goals
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7 Bad Habits That Defeat Your Personal Finance Goals
The truth remains that humans are habit-forming. Sometimes it’s confusing how we adapt to even the toughest conditions. However, one thing common among everyone is that we, humans, gradually get used to some habits over time whether good or bad.
Simply put, the more you do a thing the more you become used to it. For instance, when the pandemic hit the earth unannounced, many people were forced to develop habits they never had.
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According to reports, on average, 36.0% of people report engaging in one bad habit, 23.9% report engaging in two bad habits, and 12.0% report engaging in multiple unhealthy behaviors (MUBs).
For instance, about 68% of American adults say their financial situation either didn’t change or remained static in 2022, while not saving money was the most frequent financial error mentioned by research participants (40%), and 35% of them claimed to have developed some “bad habits” in the same year.
Sometimes poor financial habits could be a result of not understanding some key areas of finance. You want to read through this article to understand how to tackle bad financial habits.
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Key Highlights
🎯 About 68% of American adults say their financial situation either didn’t change or remained static in 2022
🎯 Humans are habit-forming and therefore gradually get used to some habits over time whether good or bad
🎯 According to reports, on average, 36.0% of people report engaging in one bad habit, 23.9% report engaging in two bad habits, and 12.0% report engaging in multiple unhealthy behaviors (MUBs)
🎯 Everyone who is skilled with money or has made it to the top has developed good habits one way or the other. So you can too!
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SEE ALSO: 10 Best Mobile Apps that Helps Improves Your Personal Finance Goals
7 Bad Habits to Avoid
Apart from the prevalent bad habits (including smoking, inadequate sleep, excessive drinking, physical inactivity, obesity, and others), do you know that poor financial habits are dangerous for your personal financial goals?
The major problem is that once you develop poor financial habits, they’re usually hard to spot and stop. And sometimes these habits can be prevalent in teens and college students.
However, everyone who is skilled with money has developed good habits, so you can too. Here are seven bad habits that defeat your personal financial goal.
1. Failure to Think Plan & Save for the Future
Planning the end from the beginning would always ensure that your life goals are in order. However, a lot of Americans lack future readiness.
For instance, a 2019 survey by Northwestern Mutual found that 15% of Americans age 25 and above don’t have any savings for retirement at all, and 22% had under five thousand dollars saved for retirement.
2. Not Making Wise Financial Decisions/Priotizing Non-Essentials
According to a 2019 poll by the life insurance company Ladder, Americans spend roughly $18,000 a year on non-essentials. That equals around $50 each day.
Spending on non-essential products reduces the amount of money available for paying for necessities. You don’t have to completely cut off non-essential expenditures. However, you should reduce it to the least minimum.
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3. Delaying the Preparation of a Monthly Budget
The truth is that you may not succeed the way you want to without a budget that includes your entire monthly revenue as well as all of your expenses.
Set a financial plan using free online templates or by using free budgeting mobile apps like YNAB, and Mint, which can provide instructions, track your spending, and even remind you when payments are due.
4. Forgetting or Not Following Your Budget
It is not enough to have a budget. You have to ensure that you keep to your budget.
One of the keys to managing your finances and ensuring that your short-and long-term financial requirements are satisfied is creating and keeping to a budget.
5. Using Your Credit Cards for Everything
Even while it makes sense to pay your monthly bills online using a credit card, it would be wise to set aside enough money from each paycheck to pay for groceries, eating out, and other daily costs that may be paid in cash.
By doing this, you’ll be more conscious of your spending, especially as you see the amount of your budget shrink a little with each purchase.
6. Failure to Set Aside Funds for Emergencies
Whether you like it or not, they always seem to show up when you least expect them. Little wonder they’re called emergency expenses.
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These expenses can have an impact on your budget for years to come if you haven’t saved much for emergencies.
7. Not Cutting Back on Your Spending
No matter how rich you think you are, you have to learn to cut down on your spending. Even the government does the same.
According to data from the National Financial Capability Study, about one out of every five Americans spend more than they make. Your objective must be to become one of those who live within their means.
Final Thoughts
Poor money habits could cause you a lot of aggravation and pain as virtually every other poor habit would.
If you don’t exercise some caution in your spending, you can accrue hundreds of dollars in interest, leaving you with insufficient funds to pay for unexpected bills. Even worse, poor money management practices can damage your credit and finances to the point that they prevent you from achieving goals like home ownership or retirement.
