Four Bad Financial Habits You Need To Break Now

Has your personal or household debt spiraled out of control? If you find yourself unable to make ends meet at the end of the month or you are constantly stressed about money, then it may be time to take a closer look at what you’re doing wrong. Bad habits can hurt your finances. The following are four harmful financial habits you need to break now.

1. You mistake credit for wealth. Revolving credit card debt still accounts for a majority of personal and household liability in the U.S. Credit card borrowing continues to rise, despite how damaging it can be for those who don’t distinguish between credit and wealth. A credit line is an available amount of money you can borrow. Your wealth on the other hand is a measure of the value of the assets you actually own. Wealth can take the form of money, property and personal items.
   
   Mistaking credit for wealth is a bad financial habit that can lead to serious trouble. Credit lines of any amount can give you a false sense of security or the impression that you have more money than you actually do. This can lead to overspending and the accumulation of major debt. Instead of charging things, strive to save money until you can pay for things instead of relying on credit cards.
2. You don’t spend money wisely. There is no time like the present to start practicing frugal spending. This is true regardless of whether or not you’re currently doing well or struggling financially. Embracing a more sustainable lifestyle is a major part of practicing smart spending. As long as you’re living and spending beyond your means, you’ll never experience true financial stability. Frugal spending doesn’t mean you have to give up the majority of things you currently pay for. It means reassessing what’s most important and deciding what can be left out of your monthly budget.
   
   Buy items meant to last. Give up things that aren’t essential to your health and happiness. Eat at home more often and shop accordingly. Take public transportation or car pool to work when you can. Don’t always think you have to have new technology right when it hits the market. There are hundreds of ways to start spending money more wisely that you can start today. Do your research and start incorporating them into your daily life now.
3. You don’t have a plan. As with anything in life, if you don’t have a solid financial plan, then there’s no telling where you’ll end up. Building financial security takes careful planning. Motivate yourself to save more money by setting goals. You may start saving for a major purchase or to pay for your education or a trip. You can also set a financial goal as to how much cash you’d like to have in your checking or savings by the end of a set time period.
   
   Keep track of your financial goals and hold yourself accountable. You can plan a monthly budget and then make saving for a financial goal part of that budget. Once you’ve worked out a reasonable monthly budget, stick to it. This is an excellent way to change your bad financial habits to good ones.
4. You are not saving for retirement. Think you’re too young or just too broke to save for retirement? If so, then you’re most likely guilty of this bad financial habit. When you’re in your twenties and thirties it’s easy to convince yourself to put off saving. However, the earlier you start the more interest your money can earn over time. Giving your earnings time to compound means you won’t have to put away as much to have a comfortable nest egg in the future.
   
   Start saving for retirement as soon as possible. Try to put away between 10 and 15 percent of your income at least. If you’re already in your 40s and have yet to begin saving for retirement, then you’ll want to work out a plan to put away more. Take advantage of any work retirement plans such as 401(k) plans to help save more. Opening up an individual retirement plan (IRA) is another excellent way to save for retirement.