Have you ever tried building your finances but always failed because of one unexplainable reason or the other? It can be really frustrating, especially after you have tried all you could and exhausted your options. You are not alone. Like you, there are many others who struggle with managing money and cannot just explain it.
See, the truth is, many times, you struggle because of bad money habits. They can make your efforts seem futile and keep you in the cycle of trial and failure. This article explains the bad money behaviours you should quit in 2023 and how to stop them. Read on to find out.
What Are Bad Money Habits?
Bad money habits are bad patterns of behaviour that you exhibit in managing your finances. These bad habits can pose serious financial consequences like increased debt, financial stress, and hindered progress towards financial goals.
The only way to stay off bad money behaviours is to spot them, understand their root causes, and build self discipline to ward them off. First, what are the root causes of bad money habits? See some of them below.
Understanding The Root Causes Of Bad Money Habits
Bad money habits do not just exist from nothing. They have root causes that many of us are unaware of. This is why we keep falling into traps and struggle endlessly to escape. Knowing the root causes of bad money habits makes it easier to tap out.
1. Lack Of Financial Literacy And Planning
2. Having A Scarcity Mindset
3. Not Being Aware Of Your Spending Triggers
1. Lack Of Financial Literacy And Planning
Financial literacy is really important if you want to overcome bad money habits. It helps you understand how to plan your money and make informed decisions every time. People who do not have sufficient financial knowledge always fall short of their wrong money spending habits.
2. Having A Scarcity Mindset
If you believe that there's never enough money, you are more likely to overspend. A scarcity mindset can stem from childhood experiences, financial trauma, or low self-esteem. Taking off the scarcity mindset helps you fight your bad money habits.
3. Not Being Aware Of Your Spending Triggers
Ask yourself: "What makes me want to spend money? Is it stress, boredom, or FOMO?" Once you know what your spending triggers are, you can start developing strategies for dealing with them.
Bad Money Habits To Quit In 2023
You need to eliminate these bad money habits as quickly as possible.
1. Not Being Able To Delay Gratification
2. Overspending And Living Beyond Your Means
3. Lack Of Budgeting
4. Impatience With Building Your Finances
5. Neglecting Savings And Emergency Funds
6. Guilt Spending
7. Paying Only The Minimum On Credit Cards
1. Not Being Able To Delay Gratification
If you cannot wait to have something, you are more likely to impulse buy. Many people often make purchases without considering their budget. They feel it is important to get it, so they spend more than they have planned. You will be better at managing your finances if you can make yourself wait until your money is ready to purchase what you wish to get.
2. Overspending And Living Beyond Your Means
Overspending and living beyond your means can lead to debt, financial stress, and a lack of financial security. With the effect of inflation on economies, it is more important than ever to be mindful of your spending and make sure you are living within your means. It begins with being disciplined with your budgets and making the right spending choices.
3. Lack Of Budgeting
If you do not budget your income and savings regularly, you will always spend beyond your control. Even more, impulse spending will make you swipe your card for things you may never need. You will not be able to account for your expenses, learn your spending mistakes, and may hurt your finances in the long run. So if you want to effectively manage and build your finances, you must stop the bad habit of not making budgets.
4. Impatience With Building Your Finances
Personal finance development is not a quick process. It takes time, effort, and resources. So you need to be patient with the process and in fact, enjoy it. The building process helps you to learn what to avoid in your finances and how to manage what you have built at every time. So don’t get discouraged if you don't see results immediately. Just keep working at it and you will eventually reach your goals.
5. Neglecting Savings And Emergency Funds
You might not see the essence of quality savings and emergency funds until it solves an urgent or serious problem. It is super important to pay attention to your savings and keep some money aside to serve for emergencies. With this practice, you will be in control of your money and not stress in times of need.
6. Guilt Spending
We are all emotional as humans, and it is natural to want to spend to make up for shortcomings or emotional needs. An example of guilt spending is purchasing luxury items as a way to cope with emotional or work stress. It could also be purchasing gifts excessively for others to make up for feelings of inadequacy.
But while occasional emotional spending is a natural response to life's ups and downs, it can be harmful to your financial health when it becomes a recurring pattern and leads to financial strain. You should recognize and address guilt spending if it becomes a habit.
7. Paying Only The Minimum On Credit Cards
Paying only the minimum on credit cards extends the time it takes to repay debt. And this leads to prolonged financial burdens. These minimum payments barely cover interest charges, allow the principal balance to persist, and accumulate interest over time.
This habit increases your total repayment amount paid, making it harder to escape the debt cycle. Instead, prioritize larger payments to save money and expedite your debt clearance.
Now What?
Bad money habits can keep you away from achieving your financial dreams. But to fight them, take some thought on the habits you face, determine the root cause, and build self discipline around it. With time, you will become a master of your money.
Over spending is also wrong money behaviour. At Kyshi, we can help you curb overspending by giving you up to 5% cashback whenever you make transactions like shipping, airtime purchases, cable TV subscriptions, electricity bill payments, etc. See how to save money all the time with cashback on Kyshi here.