It is essential that you save and invest your money wisely and prudently so that you can have a better future. However, people tend to develop bad habits over their lifetime and saving money in any form becomes more and more difficult. Here are a few habits that you should get rid of as soon as possible:
Habit #1: Overspending
When the amount of money that you spend in one entire month starts exceeding what you earn, you know you are overspending. It is one of the worst investing habits that a person can have. It destroys any chances of building up any forms of savings. You can cure this habit only by monitoring your spending from the very beginning of a month. Draw up a budget for a better understand of your needs and plan your expenditure accordingly. Discard anything that is unnecessary from your budget, so that you can focus on controlling your money. Overspending will not only let you save but it will also lead you to debt troubles.
Habit #2: Postponing Plans of Saving
Saving something is a good financial decision than saving nothing. And, postponing such decisions is a fatal error. The sooner you start saving, the sooner it will grow into a large corpus. Saving money is an obligatory investment, something that you should do every month before starting to spend money. You should set aside a sum depending upon your take home pay that you will save monthly. The rest can be spent throughout the month without any guilt because you have saved something for your future. By tweaking your budget, you will be able to accommodate more savings and the more you save, the greater your corpus will be. Best time to invest in your savings is when you have money to spare which is the beginning of a month when you draw your salary. Before paying anyone, pay yourself.
Habit #3: Debt
More often than not people fall into the debt trap because of their wants and not their needs. When you desire to have something outside your needs, they become wants or in other words objects of luxury. It is necessary that you treat yourself as luxuriously as possible but one should also keep track of their expenses so that they do not fall into debt. Lifestyle based purchases fueled by egos will draw the attention of debts. Paying EMIs for lifestyle decisions will incur interest that will add more to your debt. It is better to save that amount of money and go for that object instead. Credit cards are the reason why people fall more and more into the debt trap. They lure you with easy availability of money but it is extremely erroneous to fall into that trap. Debt is essential only if it is a need and not a luxury. It is okay to be in debt and take a loan while buying a house or funding your child’s education. It is an investment more than anything else. But to overdraw your credit account to buy an expensive television set is not really the way to go about life.
Habit #4: Aversion to Risks
Averting risks are good, but avoiding risks that will help you in essential investments is nothing but a bad habit that you need to change. There is a slight difference between not taking risks and understanding risks. When you understand risks, you will be able to judge and decide for yourself which risks you can undertake. For example, it is completely okay if you decide to take a risk by investing in equity, there is no reason to think it is riddled with risks because of its volatility. Expert investors do not become greats in the field of investing because they avoid risk, it’s because they understand risks.
Habit #5: Indulgence
If you indulge yourself excessively in a variety of bad habits like impulse shopping, smoking, drinking and dining out frequently, then that becomes a financial burden. Habits like smoking might not incur that much of an expense on a daily basis, but if you consider your annual expenditure on habits like smoking or drinking, you will see that it is indeed a large amount. You can cut down on your habits and use that money for other useful purposes, like investments. Not only will that help you build up your savings but it will also help you lead a healthier life