TomorrowMakers

If you are earning well but still not able to hold on to your money, it’s time to look at what you are doing wrong financially.

8 Bad financial habits to abandon in 2021

When it comes to good financial practices, a person’s habits matter more than how much they earn. Even if you earn a fortune every month, you have to stay clear of bad financial habits to ensure that you grow financially. So, in 2021, give your financial habits (and that of your household) a close scrutiny and identify what you can do to increase your worth. 

As the lady of the house, you are well placed to put your household finances in order by getting rid of these bad habits.

1. Not following a budget 
Budgets are not just for governments and backpackers. Every household should prepare a monthly budget and stick to it. A woman generally has a good idea of (and control over) the household expenses. You would be able to separate the necessities and the avoidable from the total outflow. You will also be able to allocate funds for all regular expenses like rent, debt repayment, utilities, groceries etc. In 2021, make sure you take stock of the income and allocate it prudently among expenses, savings, investments, liabilities, and luxuries. 

Related: 5 Financial habits your children can learn from you during the pandemic

2. Financial aimlessness 
This is a chaotic scenario where no one in your family knows where the money is coming from and where it is being spent. As a result, everyone has a licence to spend without any specified maximum limit. Lack of financial direction is reflected in your debt and spending decisions, and can seriously jeopardise your finances. Every woman should ensure that family members are aware of the amount of money at their disposal and spend within their means. 

3. Reliance on credit cards 
It is very easy to use your credit card for all your shopping needs. However, it is a big mistake to consider your card’s credit limit as your actual affordability. There are credit cards with special attractions, offers, and privileges for women. However, if you live beyond your means while using your credit card, or fail to pay off your credit card bills on time, it is just as easy to fall into a high-interest debt trap.

Related: 5 Things you should know about credit cards

4. Living in debt 
Just as with credit cards, availing of a personal loan is quite convenient. The loan market is highly competitive and lenders are eager to offer you attractive deals. Not surprisingly, women-specific loans are available as well. But with too many loans, you will soon be buried under a barrage of EMIs and a losing fight to balance your books. Good debt vs bad debt: What you need to know?

5. Impulse shopping 
Like any hardworking woman, you would love to enjoy the luxuries of life after a particularly hard day at work. This is when we often forget to ask ourselves if we can afford them. And more importantly, do we need them? The best way to curb the temptation to splurge on luxuries is to sleep over it and see if you still need it. Chances are that the bigger temptation of financial growth will overpower the momentary urge of splurging.

Related: Love Shopping? Here are 5 credit cards tailored for women shoppers

6. Spending your entire salary  
One common problem, particularly among the salaried class, is the tendency to exhaust all their income well before the next cash inflow. It happens due to a combination of reasons – not having a budget, impulse shopping, too much debt etc. It is normal to spend everything if an unexpected event like hospitalisation occurs. But under normal circumstances, you should save a portion of your income and try to live within the available balance. 

7. Succumbing to peer pressure 
Peer pressure can make you more competitive and give you a sense of achievement, but that doesn’t extend to spending. You shouldn’t burden your finances with a new car loan just because your neighbour upgraded from a hatchback to an SUV. As a woman and as a family, you should enjoy your uniqueness and be at peace with it, rather than try to ‘keep up with the Joneses’. 

8. Not addressing money problems 
The first step towards getting rid of financial problems is to admit to having them. Sadly, many people choose to live in denial and turn a blind eye to their financial mismanagement. This may include: knowing that you are spending beyond your means yet not doing anything to control it; defaulting in debt repayment and avoiding recovery calls, continuing subscriptions and facilities without using them, and so on. The bottom line is to get rid of ways that are financially unsustainable and bring your finances back on track. 

Related: 4 Myths about women and money you need to stop believing

Last words
Financial habits, like any other habit, are developed subconsciously. We tend to overlook the steps that lead us to a financial mistake. We may also miss learning from our mistakes, and fail to identify the underlying bad habits and take corrective action. However, by identifying bad financial habits, we can stay away from unwanted money-related problems in the future, and also solve the existing ones. Stressed About Money? Here’s How To Deal With Financial Anxiety