When we are talking about personal finances, it is certain that we all have few money habits that can damage our wealth in future. If you observe your money habits closely, you’ll realise that you’re doing such practices that’ll harm your future financial life and make you poor. So, now it is the time to recognize those habits and remove them from you.
Here are five money habits to break:
1. Haunting for alternate financial services
If you don’t use finances from an insured bank, then you might spend money from alternative financial resources like payday loans or check-cashing stores. As per the “Millennials”, study hosted by Microsoft’, 22% millennials never try to open their own bank accounts. They explained the reason is nothing but just simply disliking and distrust. They also didn’t like the unpredictable fees charged by insured banks.
But practically, many millennials don’t realise that alternative resources like payday loans and prepaid debit cards may cost you way more than a traditional bank if you choose a low-cost option.
Remedy: You won’t believe, but actually conventional . If you really find any traditional banks costly, then you can opt for online banks or credit unions.
2. Asking for monetary help from relatives and friends
At the time of an emergency, you sometimes ask monetary help from your relatives and friends. In your case, if it is nothing but a shortage of cash just a few days before the payday, and you have already emptied your savings, then it’s clearly a bad money habit.
Regularly borrowing money and not paying them back to your family, relatives or friends are not cool at all. It portrays you as an irresponsible and careless regarding your money. Everyone needs financial help sometimes, but if you make that thing your habit, that makes you cheaper and poor.
Remedy: . If you find your income is not sufficient, you may look for a higher salaried job.
Read more: Steps to change bad money habits
3. Spending the money equals to your tax refund amount
Every year as you pay your taxes, the same way you’ll also be entitled to tax refunds. Many taxpayers will be expecting the tax returns of 2015 when they reach the tax season of 2016. People often spend the equal amount of tax refund way before they get the refunded money in their hands. Practically, it’s a bad financial habit. You’re actually increasing your credit card balance through overspending, or you may misuse a refund anticipation loan (RAL).
The RAL is a short-term loan facility which you can access by using your anticipated tax refund amount. You have to pay high interest and fees to avail this loan. So, if you have that much patience to wait a few weeks and plan your spendings accordingly, you can save yourself from an additional debt burden.
Remedy: If you're determined to grab a tax refund in this coming tax season, don’t start overspending and increase your savings. . As soon as you receive your tax refund in your account, transfer the money also into your savings account. This way, instead of growing debt and paying more, you can save double.
4. Using your credit card instead of cash
Using your credit cards too often may have a bad impact on your finances. If you choose to pay your everyday needs like foods, clothes, dining, and other requirements through cards, it can only increase your debts unless you pay off the balance in full at the end of the month.
Suppose you’re going to a dinner with your friends, and paying your part of the bill part by credit card. But your friends are paying through cash. Don’t hesitate, just take the total money from them and pay off the entire bill by your credit card.
Remedy: Try to . The more you use your cards, the more balances will generate. You’ll fall into debt very soon. As you lower your credit card usage, your balances will also be lower, and so as the interest on credit balances.
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5. Having cash savings
Some people still save hard money as cash savings at their homes and prefer to use credit cards outdoors. Keeping a large amount of cash at your home is a bad financial habit. Basically, it is not safe. You might be a victim of burglary because of keeping such big amount of cash at your home. Most importantly, .
Remedy: Keep that money in , . There are several investment options out there, try any of them that’ll give you better returns.