As they say, money doesn’t grow on trees, and nobody can give you more from it. It means acquiring wealth is not the only thing that matters; you should learn how to hold onto it and create wise spending habits.
Prioritizing future planning will not be easy, but with the right approach and some patience, you can make it easier. What you did (or didn’t do) with your money will decide whether or not you should worry when it comes time to consider retirement.
Your ambitions to generate wealth and become rich are thwarted by toxic money habits, which often leave you in debt and unable to pay basic expenses! If you identify with any of these behaviors, take a break! Learn how to break bad habits and form good ones instead!
You make emotional purchases.
Impulsive purchases have the potential to alleviate feelings of sadness, frustration, or stress (much as many of us were addicted to Amazon during the pandemic’s times when we had to stay at home). The primary issue is that, in actuality, the purchase adds to your expenses, making it harder to stick to your budget.
Solution: Manage your expenses. For instance, list the things you would like to acquire and then give them some thought before purchasing them. Then, only buy the items you’ve determined you need in your life.
You do not have an emergency fund.
A perfect place to start with your savings plan is your emergency fund. Everyone knows that unforeseen events, such as the COVID-19 pandemic 🙄, frequently occur and have resulted in job losses and pay reductions for numerous others. Thus, setting money aside for emergencies is the best method to maintain financial security.
Solution, First of all, get your emergency fund ready. At least three to six months’ worth of monthly costs should be covered by this reserve. You should have at least N450,000 to N900,000 in your emergency fund, for instance, if your monthly expenses come to N150,00. When faced with financial difficulties, not having an emergency fund means you will typically seek outside assistance or loans.
You spend more than you earn.
You are living paycheck to paycheck without a suitable strategy for the future if your expenses equal or exceed your income. Long-term accumulation of large savings or wealth is almost impossible with this lifestyle. Even though your salary may not be considerable at the moment, it’s still a poor money habit to spend every last dime.
Solution: Spend no more on expenses than you make, or even worse, spend more by leading a lavish lifestyle than you make. Reduce your spending so that you can at least accumulate savings.
You use credit cards too often.
Although credit cards are helpful and can be used to purchase a wide range of necessities, you should be aware that money is not a free resource. If you are not diligent and responsible, you can end up with a lot of debt.
Solution: Avoid using your credit card excessively or seeing it as a quick fix after you’ve used up all of your money. When you initially receive your card, establish guidelines for yourself regarding when and how you will use it.
You are too focused on lifestyle.
This is the point at which your assets and savings increase, but not your income! For instance, you receive a pay raise, purchase a new home and vehicle, and enroll your kids in a private school.
However, you don’t make any further investments or savings. An expensive lifestyle means you’ll need more money for retirement and an increased emergency reserve in case something goes wrong! Your lifestyle will eventually become unaffordable if you don’t raise savings to match your increases in expenditure!
Solution: Do not try to copy others; buy things as per your budget and convenience, not just by seeing others. Also, form a habit of investment or create an additional financial backup for future.
You lend a lot of money to friends
If your best friend or sibling needs money, there’s nothing wrong with giving them a loan. However, don’t do it if it puts your finances in danger or if you won’t be able to pay back the debt.
Solution: First, look for non-financial ways to help. If you do decide to lend someone money, make sure it’s a small enough sum that it won’t significantly affect your life or force you to take out another loan. Consider it a gift rather than an obligation to repay.
Putting off investing too long
Waiting too long to invest is the eighth terrible money habit. You have that buffer, or stockpile, that we mentioned before when you start saving. Then, to get your money to start working for you, you need to look into investing it. You should also diversify your investments to ensure that you can withstand life’s ups and downs.
Solution: However, you should refrain from keeping that money in a bank account because inflation does exist and you would effectively be losing money each year. I invest in both safer and riskier ventures, both of which I’m willing to lose. Once you have sufficient savings, you should start researching various investment approaches.
Compare and Despair
You shouldn’t compare your pay or riches to those of your peers or friends. That will only cause annoyance and discontent. This may not only result in more impulsive purchases, but it may also encourage you to take out the credit card each time you go out with a friend.
Solution: Prioritize your spending and focus on meeting your most basic requirements first. You shouldn’t be concerned with other people’s income or number of promotions. Proceed by your objectives. No matter how much money you make in lakhs or crores, always remember that splitting the bill is acceptable.
Waiting till you “have more money” to save
The adage “If you don’t learn to give N100, you will never be able to give N100,000” applies to investing and saving as well. Don’t wait to “have more” before beginning to save because, because of compound interest, these two increase with time.
Solution: Form a positive habit of saving from whatever money you earn. You may face some issues in the beginning but with time it will become a huge support for you.
Insufficient financial knowledge
Financial ignorance is the tenth terrible money behavior. The fundamentals of investing, budgeting, generating wealth, and personal finance are just unknown to far too many people. They rely on inaccurate information, out-of-date guidance, or trial-and-error, which can result in expensive errors.
Solution: If you want to avoid these toxic money behaviors, start learning about personal. Some easy ways to learn financial strategies include consulting with financial specialists, reading books, and listening to podcasts. With this knowledge, you will be able to make wise choices, steer clear of typical mistakes, and create a thorough financial plan that supports your long-term objectives.
If you engage in any of these unhealthy routines, you are likely aware of how difficult it is to stop the pattern. Though a workaround exists, you are already used to it and carry it out without hesitation. Finding the harmful habits is the first step, and applying some helpful remedies is the second.
No doubt, it could take some time to break a lifetime of bad financial habits. As said, Rome was not built in a day. You will need to invest in your learning, practice sound financial habits, and, sooner than you expect, enjoy a change in your finances if you begin today!
