5 Bad Financial Habits You Should Avoid This Month

As this month begins, you need to ensure that you handle your finances in a way that will ensure you achieve financial success in the future. How you manage your finances now is what will determine what kid of life you have in the future.

Bad financial habits will limit your financial freedom so it is important to avoid them early on. Luckily there are various simple ways you can get rid of your bad financial habits in order to get back on the right track financially.

Bad financial habits and what to do to change them.

1. Lack of proper planning

Most young people do not think about their financial future. Instead they are living in the now. Which means, they are not making any plans to grow financially.

Very few young people think about saving and investing. They spend their salaries as they come which means they never have any extra cash.

Most people believe that being wealthy is having a nice car, expensive phone and buying designer things. However, this is a sure way of not getting rich.

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Instead of spending your money on these things, one should save and go into wealth creation. Good investments will eventually give you the finances to live a luxurious lifestyle without having to work too hard for it.

Make a savings budget and stick to it. Ensure you always put something away to use later on in life. You can then decide what to do with the money.

READ ALSO >>> 5 Very Common Saving Mistakes People Make

2. Taking loans to fund a lifestyle

Other than proper planning the mistake most people make is taking loans to buy things that will not add monetary value or taking a loan to buy something that will not enable them to earn more money.

A good example is taking a loan to buy a car. Although, owning a car will make your life much simpler because you get to avoid the hustle of public transport and bad weather, this comes with extra costs.

A cars value decreases with time and usage so you will sell it at a loss. Owning a car also comes with costs such as insurance, fuel and maintenance fees. Therefore you will end up using all your money to pay for the loans and for the upkeep of your car. Unless you end up using it as a taxi or any other way that will earn you money.

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Instead take a loan to buy land or a house. The value of land always goes up and if you sell it at a profit you will be able to pay for the loan and make money in the process.

When it comes to houses you can rent out the house and let the money from that pay for the loan and afterwards you will have extra income.

3. Spending your on friends

This is something a majority of people do a lot. Most people want to show off to their friends or your friends want you to take them out every Friday because you have a source of income.

You will never save any money if you are always spending it on friends and drinks. There is nothing with treating your friends once in a while but it should not be a regular thing.

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Therefore it is important that you set a limit on how much you can spend on friends every month. Use that money to start a business instead.

RELATED ARTICLE >>> 7 Things You Should Do In Your 20s To Be Rich In Your 30s

4. Being too comfortable with one source of income

Yes your salary is enough for you right now because you do not have a lot of obligations. However, you will never become rich from your salary alone.

You need extra sources of income. You can have a part time or free lance job , start businesses. Nowadays you can even run an online business and still be able to work full time.

5. Poor time Management

What is the point of spending hours playing video games when you could be using that time to do part time jobs or learning a new skill?

A new skill will look good on your CV and part time jobs provide income whereas, video games provide enjoyment for a period of time.

It is not wrong to relax for a few hours but you should not spend the whole day doing nothing. You can take a few hours to relax but then a majority of your time should be spent doing things that enable you to grow.

CHECK OUT >>> 5 Part Time Jobs That Will Help You Make Extra Cash

Proper financial planning and management is the only way to ensure you are living a comfortable life when you get to your 30’s and 40’s.

By Michelle Wanjiku