If your money keeps running out without saving any amount, the chances are high that you’ve developed costly bad habits. We all have bad habits that cost us a lot of money, and we need to tame them to improve savings. So, what are your bad financial habits?
In this guide, we’ll show you a few habits that have deprived many of achieving their financial goals and freedom. Thankfully, we’ll also tell you how to break bad habits to save more money. Keep reading to learn all the bad financial habits.
Bad Habits that Have Cost You Much Money
No matter how small they seem to be, bad money habits can be costly in the long run. That’s why you need to track your expenses and identify the little things eating up your money. Here are the bad money habits you need to avoid and save more cash. Learn how to save money as a teenager by reducing these 8 bad habits.
1. Drinking Alcohol
How much do you spend on drinking in a month? Do the math, and you’ll get surprised by the figures. If you drink a lot, there’s no doubt you’ll spend more money on alcohol. Also, if you have the habit of drinking in trendy bars, you will pay more cash.
So, how can you break from the drinking habit? You need to determine the amount of alcohol you take in a month and where you take it. Consider drinking less alcohol to save more money. It will also help you avoid drinking-related health problems.
2. Exchanging Currency at a Bank
Did you know that exchanging currency at a bank can cost you thousands of dollars? All banks usually charge high markup fees of around 2.0-2.5%, making them costly. They inflate currency exchange prices, depending on their operational costs.
So, what is the best currency exchange in Toronto? Visit a specialized foreign exchange provider to enjoy the lowest exchange rates. An excellent example is Knightsbridge FX, which offers consistent bank-beating rates. This way, you’ll save thousands of dollars.
3. Buying Coffee
If you are one person who must take coffee every morning when leaving to work, you need to watch how you spend on the beverage. Although it’s more convenient to grab a coffee on your way to work than to prepare breakfast, it is very costly.
The best way to cut back the coffee expenses is to brew it at home instead of buying it. That way, you’ll save hundreds of dollars on coffee in a year. You’ll save money even if you use a single serve pod machine like Keurig. Also, if you use coffee to stay alert during the entire day, you probably need more hours of sleep.
4. Buying Fast Foods
After a long, busy day at work, you find it tempting to buy fast food on your way back home. Maybe you don’t want to spend another hour preparing dinner, or you are craving fast food. Notably, you need around $4-$14 for your single meal, which is very costly.
To control the habit, you first need to figure out why you love fast food. If you go for it to enjoy the convenience, you better plan ahead. The good news is that most fast foods are easy to make at home. You’ll also have the chance to make the food taste better.
Gambling is another habit that has cost many people thousands of dollars. While it doesn’t pose any risk to one’s physical health, it can ruin your mental health when you lose many times. You can even end up tapping into your savings to attempt winning.
Notably, there are many gambling forms, including lottery, roulette, poker, and many others. If addicted to gambling, and your losses are more than wins, you need to stop it. By doing so, you can save thousands of dollars. Seek help if you can’t leave gambling.
6. Impulse Buying
How much do you spend annually on impulse shopping? It’s hard to tell because you always mix the purchases with other necessities. The truth is, impulse buying can cost you a lot of money, especially if you shop without a budget or shopping list.
To break the habit of impulse buying, you need to avoid shopping frequently by waiting for around 24 hours. Also, making a budget and sticking to it can help you avoid impulse shopping. If addicted to impulse shopping, bring someone along to help you shop.
Smoking is one of the most expensive habits, especially if one suffers from nicotine addiction. It can be costly in terms of the cost of cigarettes and the number of packs you smoke. If you smoke many packs of expensive cigars, you’ll spend over $500 in a year.
Unfortunately, smoking can even get more expensive when you develop serious health issues like lung cancer. You’ll spend more money on medical bills to manage your health. The best way to avoid that is by quitting smoking.
If you have the habit of overdrawing money in your checking account, the chances are high you’ve paid overdraft fees many times. Notably, most banks charge overdraft fees of $30-$35. Paying that fee every time you overdraw can be costly in the long run.
If you’re used to overdrawing, apply for overdraft protection. You can also link your checking account to your line of credit or savings account. So, if your checking account balance is too low, your bank will deposit funds from the linked accounts.
Spending more than one can afford is referred to as overspending. When there is access to easy financing, it is a typical issue. When payments for investment projects exceed the actual calculated cost, the term “overspending” is sometimes used.
Certain types of overspending are addictive behaviors as a result of psychological dependency. Sufferers overspend to cope with other issues in their lives, such as worry or stress. Some people go far in order to impress their coworkers, such as by footing the bill for a dinner at a restaurant. Others routinely deliver huge packages and furniture to their neighbors in an effort to impress them.
Overspending is caused by a number of circumstances, including:
- Low income.
- Low level of resources.
- A spending level below that of non-overspenders while earning less money.
- Increased costs for healthcare and other things.
Reasons why people overspend
Your budget will always suffer if you indulge in excessive spending. According to financial experts, if you want to live a financially healthy life, you should avoid going over your budget and accruing large amounts of debt.
Overspending might also keep you from achieving your financial objectives. According to personal finance experts, overspending has the potential to drive more individuals into high-interest credit-card debt when combined with rising inflation and interest rates.
Peer pressure may be a strong force, and it undoubtedly helps people overspend. People may feel motivated to spend more money than they can afford when they feel pressure to keep up with or fit in with their peers or social group. This may result in an impossible-to-break cycle of debt and excessive expenditure.
Peer pressure to overspend can result from a number of factors. Individuals frequently suffer pressure to live up to societal standards and expectations, which may involve purchasing expensive items like designer clothing, technology, or activities.
Individuals who are unable to afford it may feel pressured to join their friends in activities or gatherings because they do not want to miss out on the enjoyment. People could experience pressure to uphold a certain status or image within their social circle, which might necessitate spending money on particular items.
Overspending may also be influenced by boredom. People may resort to shopping or other types of retail therapy as a means to fill the hole when they are bored or feel dissatisfied. This might result in impulsive purchases and overspending, which would be bad for their finances.
Shopping might serve as a brief diversion from emotions of boredom for those who are looking for excitement or pleasure.
People may resort to shopping as a method to give themselves a feeling of success or purpose when they feel their lives lack direction or purpose.
The social comparison may cause people to feel like they need to acquire particular items to stay up with or feel good about themselves by allowing them to compare themselves to others on social media or in their personal life.
Marketing promotions may also lead to overspending since businesses frequently employ targeted advertising and promotions to persuade consumers to spend more money than they have handy. These promotions may make individuals feel rushed or limited, which may cause them to make rash decisions that they may come to regret.
Keep in mind that businesses exist to make money, and their marketing promotions are intended to persuade you to spend more. It’s up to you to choose wisely and limit your expenditure when you make purchases.
Birthdays, holidays, and weddings are examples of special occasions that might lead to overspending. Individuals frequently feel under pressure to throw events that meet specific standards or buy presents that meet those standards, which causes them to overspend. Also, people could feel the urge to make these events unique and memorable, which could result in splurging on pricey presents or experiences.
Factors that can contribute to overspending on special occasions include social expectations, emotional attachment, and lack of planning.
When it comes to presenting gifts or arranging events, people could feel as though they must live up to certain social standards, which could cause them to overspend.
Individuals may become emotionally invested in some events, which may prompt them to spend extra to make the occasion more unique or memorable.
During important events, people might not make adequate preparations, which causes them to make more expensive last-minute purchases.
Ignoring Petty Expenses
Neglecting little costs might sometimes result in overspending. These little costs may build up over time, and until they become a serious issue, people might not even be aware of how much they are spending. This is particularly true if people use credit cards to pay for these minor expenditures, as doing so can result in mounting debt and financial hardship.
Feeling Bored or Lonely
One of the most frequent causes of overspending is emotional expenditure for many people. And there is a valid explanation. Making a purchase can temporarily numb those unpleasant emotions and give you a rush of feel-good endorphins. Nevertheless, as the reality of the shopping binge sets in, those positive emotions will go.
You are on Vacation
While you are on vacation, there are no restrictions, and anything goes. Because of this, it becomes far too simple to spend money on items you ordinarily would not. But keep in mind that racking up credit card debt on pricey trinkets will seem regrettable after you return home because vacations are only brief.
What is a Money Disorder?
Financial irresponsibility is frequently a coping method for anxiety or depression-related disorders. Both overspending and underspending have the potential to become major habits that result in a lifetime of debt, family issues, and even more stress, even if they may provide momentary comfort or bliss. The path to recovery and a sounder mind might be paved by recognizing the underlying reasons why you could be using a money problem to mask anxiety or despair.
While they cannot be medically diagnosed, money disorders are repeated habits that can disrupt daily living and damage relationships. The many money dysfunction patterns are as follows:
- Recurring gambling practices are known as pathological gambling.
- Spending too much money and having a compulsive drive to buy stuff.
- Problems in getting rid of goods include compulsive underspending and hoarding.
- Stress even when not working is a sign of workaholism.
- Being reliant on another individual for financial support.
- Financial Enabling is the inability to refuse a request for money from another individual.
- Financial denial or rejection is the practice of ignoring financial problems.
- Parents involving their kids in money matters is known as financial enmeshment.
In some instances, you might find it hard to stop your habits completely, especially if they are a source of pleasure. However, you need to proceed with moderation, whether it’s smoking, drinking, or gambling. Also, consider preparing coffee at home instead of buying it every morning. That way, you can cumulatively save thousands of dollars.