While you may be busy setting financial objectives and projections, your lifestyle, which is a culmination of repeated activities, is a major determinant to the success of your financial achievements.
Not to ignore the fact that some choices can sabotage your financial wellbeing. Breaking those bad financial habits will get you closer to meeting goals.
Here are a few habits to avoid:
1. Letting groceries go to waste
When you are hungry and tired after a long day at work, it is tempting to pick up take-out rather than cooking. To avoid this, plan meals ahead. You can add “take-away” to the meal plan on certain days when you know you won’t want to cook.
Make extra meals and freeze them to make weeknight dinners easy. Check out cookbooks or blogs for some free printable weekly meal plans.
Have you ever carefully packaged leftovers, knowing you won’t eat them? This is a bad habit. Own up to the fact that you do not like to eat last night’s dinner for lunch the next day. Make smaller portions instead to spare the expensive wastage.
3. Misusing a car
Owning a car is an achievement. However, when misused it can lead to bloated bills and expenditure. Plan car-usage; set a fuel consumption limit per month.
Attending family and friends functions that are beyond the usual radar for your car might mean extra maintenance and repair costs. Instead, consider car-pooling to curtail spending. Giving out your car to friends and relatives may not be a wise decision either.
4. Rewarding yourself
While you certainly can reward yourself for hard work, you need to ask yourself if the treat is something you can afford. Have you saved up for it over time? If so, pat yourself on the back and enjoy. If not, consider a different reward. Choose to reward yourself for accomplishments in ways that are fulfilling and affordable. Always do a cost-benefit analysis before you reward yourself.
5. Waiting to save
“Change your life today, do not gamble on the future, act now,” those are the words of a traditional sage. Postponing saving because you think it will be easier in the future can be a trap. The future is filled with unexpected expenses, particularly if you settle down and have a family.
Start small instead and increase your contribution each year to ease the psychological burden. If your employer has a group pension scheme, you might be missing out on a company matching contribution if you are not saving, and that’s free money!
6. Losing receipts.
Referring to legal tax evasion, you will need copies of receipts to substantiate the expenses you claim. Some people simply throw receipts away or keep them in random spots around their home or office. This means they could be throwing away thousands-of-shillings in write-offs.
Keep a file or envelope for important receipts. Put it in an accessible spot, and when you pay your car registration, a medical bill, or a give a charitable gift, put the receipt in the envelope for safekeeping. Always use these receipts while making your annual tax returns to claim all taxes paid through your purchases.
7. Discarding valuable items
If you are not up to selling used items on e-commerce sites or at a garage-sale donate them to charity. Many organisations will even come to your doorstep to pick them up.
Some of them will exchange used shoes, electronics, clothes with new household items saving you some money and likely cost of disposing of them. If you give to qualified charitable organisations, you can take a charitable deduction on your taxes. Itemise your taxes, and have a receipt.
8. Retail therapy
According to a survey released on Ebates.com, 64 per cent of women say they have engaged in “retail therapy” and a further 40 per cent of men attempted to shop their blues away.
Among the 1,000 adults polled, more than half said they think online shopping provides better therapy than visiting physical stores.
Even if “retail therapy” lifts shoppers’ spirits, it is fraught with the danger of overspending. Set aside funds for a “spending account”. These funds can be designated for your retail therapy.
9. Ignoring credit cards and bank statements.
Now that most banking services are all going paperless, it’s easier to ignore financial statements. There may be sneaky recurring charges for items you no longer use or charges that are incorrect and need to be disputed with your financial institution.
Review your financial statements diligently for recurring expenses. Ask yourself if you use the services you are paying for. If not, drop them. When you see an item you do not recognize, contact your bank. Also, avoid subscribing to mobile services and apps without a clear objective or need.
10. Comparing yourself to others.
Do not let sleek cars, flashy clothes and high-flying lives fool you. The picture is never complete if you cannot access their financial statements. You do not know whether they have got an inheritance, made good investment choices, or saved for years to buy a car or the home of their dreams.
They probably have huge loans to settle. Do not compare yourself to them. Making financial comparison between yourself and someone else is not realistic, and may lead to unnecessary spending or stress.