Habit is second nature, and if it casts a thick shadow of problems on your life and fills it with daily discomfort, then you can and should work with it. In this article, we decided not to talk about bad habits that adversely affect health, like smoking and excessive addiction to “sip,” but about bad financial habits.
Meanwhile, they are from this (from the fact that financial) no less harmful. And they also need to be fought, while at the same time developing positive monetary skills. This is not just a text, but the opinion of financial and investment experts, from whom we asked about the list of bad financial addictions and methods of confronting them.
It is noteworthy that our experts are largely echoing each other, which indicates the presence of the same problems among the masses of people. We suggest that you carefully read the recommendations of each expert and gradually, according to their advice, begin to correct.
Habits are ways of human behavior, developed over the years, which are difficult to change. They appear in everything, including in relation to money. We will figure out which ones to get rid of..
1. Lack of revenue and expense planning
Bad financial habits can not do without this. This is not only about the amount of cash, but also about the timing. In the absence of revenue planning and spending, a cash gap may occur..
A very useful thing is a payment calendar, which reflects the dates and amounts of receipts and expenditures of money. By composing it, you can “move” irregular payments, thereby mitigating the risks of cash gaps.
2. Hasty loans
Sometimes situations arise when you need to purchase something. In this case, loans can help out. However, one must always remember that not every loan you can afford. We are talking about interest for using this loan. It is also important to evaluate your ability to repay this loan, i.e. stability of your income.
Before signing a loan agreement, study in detail all its conditions, interest rates, evaluate the loan term, as well as your opportunities, namely the availability of free money to pay off debt. It may be that this loan is not what you need.
3. Lack of payment discipline.
Sometimes it seems that nothing bad will happen if you pay bills or pay off a loan a day – two or three later. However, if the payment deadlines are not respected, penalties, fines and other sanctions are charged that increase expenses..
Make a payment calendar. A very useful service is “auto payment”, which is now provided by all banks. In this case, you will not forget to pay this or that bill or receipt.
4. Lack of systematic savings
As a rule, people pay current bills, repay loans ahead of schedule, etc. completely forgetting that it is necessary to save money for future expenses and unforeseen situations in the future. This is called an “airbag.” Such savings are really needed, otherwise, plans will be extremely difficult to implement.
Develop a habit of saving money. It is useful to use the automatic transfer of money to a personal deposit account offered by banks. Deductions can go both fixed and a certain percentage of revenues to the current account or expenses from it.
5. Payment for unnecessary services
Basically, of course, these are regular monthly payments. A simple example: cable television. People pay, at first glance, small bills for 150, 200 or 300 channels. However, it is worth considering whether they are watching all these channels and whether they need to be paid..
Another example is renting. It will be useful to analyze whether the rented area corresponds to market rates, the stated conditions, as well as its need for such an area. Paying for such services, we “throw out” very decent amounts.
From time to time, take an “inventory” of regular payments: bills for water, electricity, cable TV, the Internet, and more. These are all the costs that you can influence by reducing them..
6. The acquisition of something at the last moment, in the peak season
Create a “calendar of holidays and important events”, with which you will plan in advance the cost of gifts and necessary expensive purchases. New Year’s gifts, for example, can be bought during the current year, and the same amount every month can be saved on building materials that are needed in the summer.
7. Hasty purchases with free money
Everything is simple here. Measure a hundred times, cut once. When the so-called “free” money appears, sometimes it is tempting to get something that you did not plan.
Analyze all your upcoming expenses, check if you have replenished your savings. Perhaps it makes sense to repay the loan ahead of schedule so as not to pay extra interest on it.
1. Inability to draw up a financial plan
One of the most harmful financial habits of Russians, in my opinion, is the inability to draw up a financial plan. Only a few on the day of receiving a salary try to figure out what they will spend the money on for 30 days. That is why often at the beginning of the month people make spontaneous purchases, which they later regret, and by the end of the month they borrow money to purchase the most necessary.
2. The desire to live on credit
Closely interconnected with the first and second financial habit, which adversely affects the standard of living of our compatriots, is the desire to live on credit. According to a VTsIOM study published in November 2017, 57% of Russians have one or more outstanding loans. For comparison – in 2009 only 26% of respondents had bank loans.
Yes, there are situations when lending is the best tool to solve the problem, for example, when acquiring real estate. But most consumer loans significantly limit the financial ability of people for a long period of time. There are frequent cases when our fellow citizens are forced to issue a new loan in order to pay off the previous one. You can get rid of the need by resorting to credit instruments if you save and create a pillow of financial security.
3. Unwillingness to make savings and investments
This is another bad financial habit of Russians. It is connected, firstly, with the low incomes of our fellow citizens, and secondly, with poor knowledge of modern methods of storing and increasing capital. The fact is that the use of a deposit as the only tool for working with savings today should be considered as another financial habit that negatively affects the standard of living of the population.
Yes, there was a time when a savings deposit really had reliability and provided significant profits. But in the current situation, bank account returns barely exceed inflation. The reliability of this tool has also significantly decreased, since the number of banks has been rapidly decreasing over the past three years. Not all customers of credit and financial institutions that have lost their licenses managed to quickly and fully recover the savings stored on deposits.
In this situation, I would recommend turning to alternative financial instruments, in particular, stock market products. Federal loan bonds and debt securities of dynamically developing companies, stocks, repurchase agreements with the Central counterparty today provide stable income with a low level of risk.
I must admit that most Russians do not have experience working with modern investment instruments, so they should choose stock market products under the guidance of highly qualified financial advisers – experts from large investment companies with experience and an impeccable reputation..
1. Uncontrolled spending
This is the most common and the most “financially difficult” habit in terms of consequences, which only grows stronger with the development of cashless payments and online payments. Many people can’t remember exactly their daily expenses, not to mention weekly, monthly and annual expenses. As a result, there is a feeling that money literally evaporates. This habit is quite easily adjusted. It is necessary to record your expenses and then analyze the results of the week-month-year. Today, this task is simplified as much as possible: just configure the statistics of the online bank or use a mobile application that takes into account expenses. This approach will allow you to see where the money is spent and start spending it more consciously..
2. Excessive costs
The second, no less problematic, follows from the first habit – the discrepancy between expenses and income. It sounds illogical, but many manage to spend more than they earn. Such people, as a rule, have one or several credit cards that allow them to spend money even when they really are not. There is one solution to the problem, and it is not easy – to reduce costs. To understand which expenditure items should be cut down in the first place, it is worthwhile to take costs under control first – record and analyze them.
The need to buy a large number of things is familiar to us and supported by our surroundings. As a result, we often do not notice how we move to excessive consumption, buying goods that are essentially unnecessary. This applies to both small souvenirs on trips and large acquisitions: cars, securities, etc. Today, our society is already at such a stage when it is not interesting to have things. It is much more profitable to invest in personal and professional development, in business, in the implementation of one’s or others’ ideas. To get rid of the habit of excessive consumption, it is worth shifting the focus of attention to what helps to develop. Switch from things to activities and results.
4. One source of income
Many people believe that work should be one. But such thinking is just a stereotype. Alternatively, you can strive to have multiple sources of income. Moreover, today it is easy to implement thanks to online services and exchanges, where you can create your own specialist profile and provide services by collecting feedback and receiving new customers. The presence of even a small source of income in addition to the main job will help achieve financial security and, as a result, reduce stress.
5. Unloved work
Work where you are lucky to get a job is a bad habit, which today is not justified. The market is so large that everyone can find an industry for themselves and make good money. Today there is no reason to engage in an unloved affair or to agree to poor conditions. Firstly, it shakes the nerves, and reduces the level of contentment with life (the level of happiness, in fact), and secondly, it affects the effectiveness.
A dedicated employee who is doing his job will always achieve better results than a colleague who works after the sleeves. Due to this habit, many people are scared to change something, but this is necessary to stimulate changes for the better and give themselves more reasons for joy. Do not forget that we have one life and it has genuine values - family, dreams, new impressions and hobbies – all that makes the heart beat more often and brings happy moments. Finance and its planning is just a tool to achieve goals, one of many.
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