Bad Spending Habits That Wreck Every Budget

You can put in the work to develop an airtight budget. You can commit to realistic financial goals that take you closer to the wealth you desire. But, if you aren’t spending your money correctly, you will never see any progress toward your anticipated lifestyle.

Spending is easily one of the most important skills in the modern world, but it isn’t taught in schools or in most homes. Here are a few important bad spending habits that will always put you in dire financial straits.

Neglecting to Follow a Budget

If you do nothing else to manage your personal finances, you should at least make a budget. The budget is the most fundamental personal finance tool; it is so customizable that a budget can be made to fit every person’s lifestyle, needs and financial goals. Budgets make it easy to track income and spending, debt, investments and more, providing a complete financial picture to guide decision making.

Yet, a problem arises when you have a budget to help you control your spending and saving, but you don’t bother to follow it. A budget only works when you stay accountable to it, so you need to make using your budget a high priority.

Buying Impulsively

Everyone has impulses, but recognizing which impulses are good and which are bad takes some personal development. Acting impulsively when it comes to spending is a good way to pay too much for stuff you don’t need.

There are a few good methods for breaking the habit of impulsive spending. For one, you should recognize when a store is trying to trick you into spending money impulsively — like by placing seemingly inexpensive items near the checkout or by telling you that you could save money by buying now. You can also impose a mandatory waiting period on all purchases (except essentials like rent and utilities). If you have to wait 30 days for something useless, you are much less likely to buy it.

Spending Emotionally

Emotional spending is a bit different from impulsive spending. Many people turn to shopping when they are bored, stressed or otherwise unhappy, and as a result, they end up buying things they don’t really need in an attempt to make themselves feel better. Making purchases does tend to give the brain a small dopamine boost, but the good feelings quickly wear off.

Instead, you should try to replace shopping with an activity that provides long-lasting satisfaction. You might take up a hobby like painting, or you can put your emotional energy into working out. If you still struggle to control your emotional spending, you might consider working with a mental health expert to better understand where your feelings are coming from and how to channel them more healthfully.

Relying on Credit Cards

Credit cards are useful tools that help you afford big expenses, and they can be helpful in building good credit and increasing your credit score. However, credit cards are also dangerous tools that can send your finances into a harmful spiral if you don’t know how to use them properly.

If you are able to use less than 30 percent of your credit balance every month and pay your balance off in full, you are using your credit cards safely. On the other hand, if you have accrued huge amounts of credit debt, it might be wise to cease all activity on your credit cards and focus on paying down your debt as soon as possible.

Incurring Fees Unnecessarily

Some types of spending force you to incur fees, and though some of these fees are unavoidable, you should do everything you can to keep fees to a minimum. Some examples of dangerous and unnecessary fees include:

Overdraft fees. If you spend more money than your account holds, your bank will likely impose an overdraft fee. These fees add up with every attempt at spending money you don’t have, which is why using a budget and tracking your spending is so important.

Late fees. Every bill you owe has a deadline for payment, and if you miss that deadline, you will incur a fee. You need to be aware of upcoming bill due dates, so you can at least make minimum payments that help you avoid late fees. You might sign up for services like automatic bill pay if you always struggle to pay bills on time.

ATM fees. You can withdraw cash for free from your bank, and doing so allows you to control how much cash you spend during a certain period. If you are racking up excessive ATM fees, you should consider alternative forms of payment or else find a debit card that doesn’t incur fees.

It is possible to break every bad habit, and spending-related bad habits are especially important to eliminate and replace. By using financial tools, you can start fixing your bad spending habits sooner and get on the path to financial freedom and success.

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