2017 is about to close and financial resolutions for the New Year are going to be on the minds of many again. If this year wasn’t as good and bountiful for your situation as you would have liked, maybe it’s time for a financial facelift.
Don’t face 2018 penniless. Start by identifying your triggers and learn to curb your poor spending habits. Here are some common money habits you need to break to start the New Year right.
1. Buying food like it’s gold
Food is a basic need. However, in this age of social media, many are dining out because of a meal’s Instagram-worthiness, and not necessarily for its nutritional content. And typically, when it’s #foodporn, it comes with a hefty price tag. While there’s nothing wrong with going on a gastronomic adventure every once in a while, eating out too frequently will cause a dent in your wallet.
2. Living a lifestyle you cannot really afford
With all the triggers on social media and the sales popping up here and there and even online, many consumers end up going overboard and spending more than they should. Some even don’t set a budget at all, they just keep trying to live up to a certain kind of lifestyle. Going neck-deep into debt just to be seen clutching that expensive purse or driving that top-of-the-line car is never going to be okay. Maxing out your financial resources and living paycheck to paycheck financially disarms you and leaves you vulnerable to future financial emergencies.
3. Paying beyond the due date
You may have the capacity to pay the penalty fee in case of late payment but you should still strive to pay your credit card bills on time. Missed payments build up over time and can also affect your credit score. A low credit score means lower chances of getting approved for loans for bigger purchases. If you are the forgetful type, set up an automatic payment or turn on the reminders on your mobile to build a monthly routine.
4. Paying the minimum amount of balance
Paying the monthly minimum of your credit card balance is enticing, especially when it offers low-interest rates. Though the payment term offers a light monthly payment, you are actually hurting your finances. With the ballooned interest, you are actually paying more. Make it a point to pay the full amount indicated on your bill every month.
5. Rewarding yourself through purchases
There’s nothing wrong with treating yourself after accomplishing a big project or overcoming a stressful week at work. But stress shopping, stress eating, and reward splurging can end up with you spending more than you should. Splurging too much and leaving your wallet with nothing will only cause further distress from worrying. Look for affordable and cheaper ways to reward yourself, like a relaxing massage for just 300 pesos.
6. Shopping as mood booster
Retail therapy is a lie – a different face worn by the same evil. As mentioned above, retail therapy is also a root cause of overspending. Allot a budget for simple shopping pleasure instead, like Li Ka Shing’s secret formula to wealth, which covers budget allocation for both necessities and leisure.
7. Trying too hard to belong in the circle
Many are accustomed to joining the bandwagons of the moment. It could be jet-setting to the most popular party cities or buying the latest kicks with a hefty price tag, or snatching up the latest phone as soon as it’s out on the market. Basically, when your friends buy something or something is posted by an influencer, the item is deemed worth the buy for bragging rights and just to belong. This mindset is a surefire way towards mismanaged finances.
8. Living without a safety net
Realize your needs and want and establish long-term goals. Doing so will help you determine the amount you need to save and set a deadline. Set up an account and make an automatic transfer from your payroll account to your savings account. Also, investing in stocks and mutual funds grow your money while it sits.
Source: CNBC, American Express, Nerd Wallet, Forbes, Power Pinoys, Financial Samurai, Efren Nolasco