What’s your worst habit? Biting your fingernails? Snacking between meals? How about overspending? Bad spending habits are something that many of us struggle with, so much so that the average UK household is going to be in £10,000 worth of personal debt by the end of 2016. So, getting a better handle on our finances is something that plenty of us would like to learn how to do! But do you know how to do it…?
Well, we’ve put together some top tips for breaking up with your bad spending habits. Follow these steps if you want to be richer, happier and more financially secure in future.
First, bear in mind that it (reputedly) takes 21 days to break a habit. If you’re going to really commit to changing your attitude towards money, you’re going to need to prove that you can stick to a budget for at least 21 days straight. There can be no ‘cheeky shopping trip’, no coffee on the way to work ‘just this once’, and certainly no ‘quick pint’ in the pub if you haven’t budgeted for it. If you’re not ready for that yet, assess whether or not you’re actually ready to change your spending habits.
Second, you’re going to need to re-condition your behaviour. If you’re a bit guilty of spending too much money on your cards, for instance, cut them up. Or, only allow yourself to draw out cash once a week or once a month. This way, you’ll force yourself to spend nothing more than the actual money you’re carrying with you. This is much better than allowing your bank account to see an unending stream of activity as you bounce from café, to shop, to ATM. This is a really important step, as we know that spending money on plastic doesn’t really feel like spending money.
Third, get into some good habits. This could mean installing a banking app on your mobile phone and setting an alarm that prompts you to check it every day. This might seem excessive, but making a set time for you to routinely check your bank balance will ensure that you’re not burying your head in the sand where the state of your finances are concerned.
Then, go a step further and start to automate some healthy habits. For instance, you could set up a direct debit that automatically pays a sum of money into a savings account after payday. It doesn’t have to be a huge amount, but anything you can spare will eventually add up to a much larger sum. This will get you in the habit of living on less, and you’ll probably even get a kick out of seeing your savings account grow month by month too – all without having to be particularly proactive.
Finally, get a handle on any existing debts you have. Pay off the debts with the highest interest rates first, and think about switching your debts to a cheaper lender if you can. Whether you’re paying back a credit card, repaying a payday loan or keeping up with a logbook loan, it’s often possible to switch lenders so that you can get a cheaper rate or better terms and conditions.