Today’s actions determine our future. This is true for many areas of life. In particular, for financial reasons. Bad money habits make people unable to afford to retire.
However, this can be avoided. It is enough to get rid of habits that have a negative impact on the financial situation. By starting to make the right decisions now, you will ensure your own secure future.
This article is devoted to actions that have a bad effect on the financial situation. We will tell you what they are. Plus, we’ll show you some simple steps to change your shopping habits.
10 Spending Habits Impacting The Future of Your Retirement
Let’s say a close friend bought himself a new smartphone. The chances are that you will also want to update your gadget. However, before you start looking for the perfect new smartphone, consider whether this purchase is really necessary?
People are social creatures. Therefore, it is easy, watching others shopping, to want to buy something for yourself. However, this desire is often worth restraining. If a particular purchase does not match your priorities, then the best solution is to refuse it. Instead, think about how to change your life for the better. For example, change jobs or even a profession. To do this, you may need a CV writing service to create an attractive presentation of yourself. Perhaps what you are currently doing cannot provide you with the life you want, significantly if nothing has changed over the past few years.
The desire to have what others have can have a detrimental effect on your financial situation. It is impossible to constantly adapt to the purchases of others. What matters is not what others have but what you need.
So take some time and set your personal priorities. What purchases are necessary? What do you really want to buy? What are the most important expenses?
The answers to these questions will help you clearly see your own priorities and remember them. This will serve as support. The next time a friend buys a new laptop, you may find it easier to calm the urge to upgrade your own gadget.
Buying things because they are discounted
The first thing to realize is that stores are constantly offering discounts. Therefore, it is important whether you really need a specific product. If so, then there is no problem. If you decide to buy because it is a “good deal”, then you should refrain from purchasing.
Promotional offers are not uncommon. If you want to achieve your financial goals, then you need to learn how to curb buying impulses. After all, following promotions can lead to high expenses on unnecessary things.
Modern companies are well versed in the specifics of purchasing behavior. Therefore, they use vulnerabilities to push people to buy. Your task is to notice and be aware of this. By identifying unconscious purchases, you can reduce their number or even abandon them altogether.
To stimulate impulse buying, sellers use triggers. They are especially noticeable in shopping centers. Priority products are placed at the eye level of the target consumer. Therefore, goods for adult buyers (for example, wine or chips) are placed at the height of about 160 cm. But children’s products are located below. At a height of about 100 cm, it will be right in front of the eyes of young sweet tooths.
To warn yourself against impulse purchases, go to a store with a shopping list. Any product that is not in it is overspending. Get into the habit of buying clearly from the list.
However, sometimes there are situations when in the store there is a product that you really like. How to proceed in this case? Provide some buffer time—for example, 24 hours. If you see a product in the store that you did not plan to buy but you want, then postpone the purchase for a day. During this time, you can decide if you really need it.
Also, avoiding impulse purchases will help to avoid shopping with your child. Especially when shopping for groceries. A variety of sweets are at children’s eye level. Therefore, the child will definitely want something and will very much ask to buy it.
Ignore small acquisitions
People tend not to notice the little things. This happens, in particular, in costs. Often small purchases under $ 5 are simply not included in the budget. How can they affect something?
If this is one purchase, then the amount is really insignificant. However, by making this kind of spending a habit, you can significantly increase your monthly budget. Plus, every dollar spent on petty purchases is lost savings.
However, such costs can be controlled. To do this, keep track of finances. You can do this in any convenient format: in a notepad, or using an application. The method does not matter. Another thing is important – to determine where and on what money is spent.
For starters, just watch. For example, fixing expenses for a month. This will allow you to analyze them. See where the money is going and identify the most important expenses. There will definitely be those in which there is no real need. Cut them down.
At the same time, it is important to ensure your own psychological comfort. Otherwise, it will not work to follow the strategy in the long term. How to do it? Let’s imagine that a person is very fond of pizza. Therefore, the costs of visiting establishments and delivery make up a large share of all expenses.
You can reduce them by reducing the frequency of orders. For example, setting the rule: pizza only on Saturdays. Or, while such a decision seems radical, order it 3 times a week. The main thing is to make sure that people spend less on pizza than they do now.
Ordering lunch at work
The busier is the working day, the less free time is for other tasks. Some things cannot be done. For example, make yourself lunch at home.
Many office workers strive to minimize the time they spend eating. Therefore, they order food delivery to the office. This allows you to reduce the time spent on cooking, reheating, and eating food down to one step. Plus, the cost per shipping isn’t too high.
Difficulties arise if this happens on an ongoing basis. Five lunches will probably cost a lot. You can reduce expenses by starting to bring lunch from home at least a few days a week. For example, Monday, Wednesday, and Friday. Even such a small change will have an extremely beneficial effect on your finances.
It should be noted right away that not every dish takes a long time to cook. The belief that cooking takes a lot of time is wrong. It costs a lot of money. To be convinced of this, it is enough to spend a little time looking for quick recipes. Many amazing dishes are cooked in 10-15 minutes. You just don’t know about them yet.
Non-compliance with budget
Many people don’t like writing down every purchase in a notebook or app. Initially, it seems that this is the main difficulty. However, keeping records is just the beginning.
By recording expenses and income, you can see what things the money is spent on. Therefore, you can define optional costs. It also becomes clear what expenses are required and how much they cost. This is the foundation of financial planning. Lack of accounting and control can lead a person to a financial deficit.
It is important to spend as much as you can actually afford. That is, define a monthly budget.
This is done by dividing all costs into two categories:
- Required. For example, rent, credit, food, insurance, utilities, and so on.
- Discretionary. These include shopping, entertainment, and more.
Understanding the amount of money that is spent on such things allows you to determine if the cash flow is positive. To do this, you need to subtract it from the total income.
If after that some amount of money remains, then the flow is positive. If not, then you need to cut costs. This can be done by reducing discretionary spending.
Active but misuse of a credit card
Credit cards are useful, but not always. Many people use them incorrectly, thereby worsening their own financial situation. To prevent this from happening, avoid common mistakes.
Credit card debt
A credit card is not a special account for purchasing groceries. It is useful in emergency situations. Paying daily bills such as entertainment and food can lead to a waste of money. However, this does not negate the need for their return.
What if sometimes your hands reach for a credit card? You need to exclude it from payment processes. To do this, start using cash. This is especially effective when a monthly budget is set for categories such as groceries, utility bills, and more.
In this case, use envelopes. Sign each with a specific type of expense and put the amount provided there—for example, groceries and utilities. Get in the habit of paying only with the money that is allocated for it.
Using a loan as a reserve fund
A normal reserve fund is a money deferred from income. However, its formation is a rather difficult task that requires self-discipline. Therefore, sometimes people use credit cards as a reserve fund. However, loans from banks are not capital for emergencies. These are debts.
The disadvantage of this strategy is that emergencies are often costly. Having developed the habit of using a credit card in such cases, a person can accumulate large debts. After all, loans from banks involve the payment of interest. Because of them, the debt increases.
This strategy is a vicious circle, as a result of which a person becomes unadapted to solving problems. Learning to act in difficult situations can only be done by saving money.
Pay for subscriptions you don’t use
The Netflix subscription is great. At least for the moviegoer. However, the registration and payment of a subscription by a person who rarely spends time watching movies is strange. At the same time, many people sin like this.
Sometimes payment for subscriptions happens by accident. Perhaps once you loved one magazine very much, but now there is simply no free evening to read. Or half a year ago, you were delighted with the music on some website. What about an online TV subscription? You definitely don’t have it?
Take some time and check which subscriptions you are paying for. Sometimes the reading of a small amount is simply not noticed. However, even a couple of dollars are expenses. In the context of a monthly or annual budget, they will be tangible.
Spending more than earning
The extreme form of denial is to say that this is impossible. Alas, this is quite real. If desired, a person can earn $ 2,000 a month and spend $ 2,200. How? For example, through the use of savings, loans, and borrowings.
This is not immediately felt. However, by practicing for such a long time, one can dig a hole for himself. After all, savings will end someday. As well as the credit card limit.
Keeping financial records allows you to avoid this. Make sure that your expenses do not exceed your monthly income. This is a good start to achieving your financial goals. By living within your means, you will ensure stability and your own safety.
Ignore the importance of financial knowledge
Self-education is the key to personal growth. However, it is the importance of acquiring financial knowledge that many people ignore. What a waste. After all, finance affects all areas of our life. The quantity, quality, and depth of knowledge associated with them determine the level of their understanding.
People who understand personal finance, savings, and investing are capable of making strategic decisions. Accordingly, it is more efficient to manage your own money. Therefore, it is worth accumulating and deepening such knowledge. Remember your long-term financial goals and discipline your own financial habits.
Changing your financial habits is a difficult and time-consuming process. Therefore, to begin with, start keeping track of expenses. Check if you are making any of the above mistakes. If that happens, just tweak and refine your own buying behavior a little at a time. Moreover, we suggested how to do it.