13 Bad Financial Habits and How to Break Them Revealed

It is easy to get into bad financial habits when we are not mindful about our spending and this can leave you feeling panicked at the end of the month. However, it doesn’t have to be this way and with a little bit of effort, you can change your money mindset and overcome your bad financial habits.

We can all get into bad financial habits when it comes to managing our money. We can often feel stuck in a rut, and there is no way that we can improve our financial situation but often breaking the bad habits that have been formed over the years is the best key to financial success. The truth is, we can all feel trapped by our financial status, but we also have the control to make the changes.

So what can you do? It is time to take a long hard look at your financial habits, your monthly budget and have a bit of a reality check on some of the things you might be doing daily that are hindering your chances of making the improvements you desperately want to.

13 bad financial habits people make every day and how you can break them.

How many of these bad financial habits have you fallen into? The problem with habits is that they can creep up on us overtime. You can have enough money if you work on good money habits, so read this and honestly look at where you can change your money mindset and reset your finances for a better 2022.

Polar Credit is a direct lender which offers credit to people looking to borrow money. This can help you get back in control of your finances and then you can start looking at these financial habits many of us have and start changing things for the better. For more information, visit Polar Credit.

Impulse purchases and unnecessary spending 

One of the first things you might want to consider is avoiding impulse spending and unnecessary purchases. We can all be guilty of seeing something in a store and just buying it for the sake of it, or perhaps spending more than we need to on food because we haven’t taken a list or done a meal plan. Impulse buys and unnecessary spending is one of the biggest causes of overspending each month, but this is a financial habit that can be broken with a few changes. Things like budgeting, walking away to think about purchases, and being more organised are the key ways to overcome this obstacle. We could write a whole post on this alone!

Top Tip: Set a realistic budget or spending plan for fun things outside of your bills.

Using credit cards for the benefits if you can’t pay them off in full

Many of us will have credit cards for some of the benefits they can provide. Perhaps loyalty points or cashback. However, credit cards are only useful and beneficial if you pay them off each month in full and don’t accumulate any interest on late payments. Otherwise, the interest you are paying will far outweigh the benefit. Stop using credit cards if you are not paying them off in full. Your credit card bills should be a priority payment each month.

Top Tip: Don’t keep your credit cards in your purse or wallet, leave them at home. This way you avoid spending without thinking, which leads to becoming more mindful about spending which is developing good financial habits in the long run.

Feeling the need to keep up with family and friends 

We can all feel that pressure to keep up with family and friends, especially when we see their perfectly curated lifestyle on social media.! Remember this is someone’s highlight or showreel, it is not the mundane everyday life. Whether that is with a new car, clothes, the things you do, and even the house you live in. However, this can put pressure on us to spend more than we have. Focus on you and what makes you happy and nobody else. 

Stop Making it Hard to Save

Many of those with bad financial habits don’t save enough even when they can. Set up automatic savings pots that go out with your bills. You can use it to save money every month, this then becomes second nature and soon you will have meaningful savings. Too many live with immediate gratification and only think in the present rather than planning for their financial future. Everyone should have a savings pot for emergency expenses The good news is that it is never too late to start healthy financial habits.

Top Tip: Join a savings app today

Stop making excuses

Everyone is capable of creating better money habits but it is easy to blame others for our financial failings. You need to take responsibility and be proactive rather than accept the status quo. The change will only happen when you have good thoughts. It is your responsibility to understand where your money goes and develop good habits. If you are self-employed for example you need to be putting money away for your tax bill.

You need to read the important information when you take out a financial product and make sure that you understand the interest charges. Understand how your mortgage works and then you can overpay, even a small amount can have really positive outcomes and help towards financial freedom.

Retail therapy 

Retail therapy is something that is suggested when you need cheering up, and while buying new things can give you a bit of a mood lifter at the time, you are putting yourself in the position of feeling worse once the credit card debt arrives or you have spent more than you should have done. Consider who retail therapy benefits and you will quickly see that it’s capitalism the wealthy! It is not good for individuals or the environment!

If shopping fills a gap for you, think about why and what is missing, where do these bad money habits come from and what purpose do they serve? Instead, have a savings account where you can add to it for shopping sprees and retail therapy so that it can be seen as guilt-free and budgeted for. 

Top Tip: Shop preloved and only when you need to.

Overspending 

Ever wanted something yesterday but have to wait? We have all been there, it is why Amazon Prime is so popular. But many of us pay more for convenience. Paying extra in postage because we want faster delivery or paying more for something that will arrive quicker than another store. You can overspend in other ways such as on your food shopping if you don’t have a list, or if you haven’t planned any meals you can be tempted to spend more on takeouts or fast food for convenience.

Overspending is usually down to a lack of organisation, so if you think ahead to when you might need to make a purchase, write lists, plan what you need to do with things such as food or events, then you can ensure that you only spend what is needed. 

Ignoring debts 

Are you one of those people that sticks their hands over their ears and shouts “I can’t hear you” every time the word debt is mentioned? You are not alone. Debt is a big problem for many, and while credit is a big part of our financial lives these days, it is also important to ensure that your debts are manageable. If you do have debts or are struggling with the debts that you have it isn’t good to ignore phone calls, miss payments, and get yourself into a muddle with it.

Ignoring the problem won’t make it go away. Make sure that you break the bad financial cycle and seek some advice. You will start to feel better and make some better financial choices. 

Top Tip: Speak to organisations who can help you including citizens advice and Step Change. Both offer free impartial advice and will help you come up with payment plans and be able to help with late fees and personal finance.

Not budgeting 

A common bad financial habit is not budgeting. We can all be guilty of letting the bills go out and not being fully aware of what our financial situation is like afterwards. This can often mean overspending or spending what you don’t have. A budget can help you to be fully aware of your current financial situation which will help you to stay on track and live within your means. 

Top Tip: Audit your bank account, look at what comes in every month and what needs to go out as a minimum payment. This is the best way to stay out of financial trouble.

No future plan 

Many people struggle with their finances because they live day to day and paycheck to paycheck. I appreciate that this can often be the reality for so many, but having no future plan for your finances can also be a big mistake. It is a good idea to look at your finances and decide what you want from the future. That might be a bigger house, it could be a holiday, a retirement account, it may be to pay debts off.

Not having a financial future or making financial decisions could be detrimental to your current financial status.

Top Tip: Sit down and think about what your goals are for the future. Write them down and put some time frames next to them, this makes them SMART targets and savings goals.

Make more money

This is often overlooked when considering your bad financial habits, rather than trying to cut back on spending do also look at where you can make extra money. The first thing is to look at your current job – is there scope for promotion or a pay rise? Speak to your line managers about career progression. It doesn’t need to be working MORE hours or looking for a second job, it can be as easy taking on a new role within your existing workplace. Alternatively, if there is no career progression maybe start looking for a new job.

Side Hustle

Another way to make money is from a side hustle – do you have clothes that you can sell, do you have a skill that is in demand. There are also lots of different ways to supplement your income for example filling in surveys or typing jobs. This is not free money and won’t be a get rich quick scheme but it can help with unexpected expenses. Just be mindful of any MLMs where you are having to buy stock and then sell to friends and family as no one really wants to be that person and these schemes are often too good to be true.

Changes in your habits 

Finally, It might be a good idea to look at how you can make some changes to your habits to help improve your financial situation. This isn’t necessarily financial habits, but more to do with daily habits that could be costing you money. For example, this might be meal planning and writing a list so you only buy what you need from the store. It could be switching lights off, unplugging electrical items, and using less energy overall in your home to save money on your energy bills.

Sometimes your lifestyle can be having a negative impact on your financial health and a few small tweaks can make a big difference.

Hopefully, these 13 tips will help you to break any bad financial habits that you have.