Bad habits have a way of taking hold and not letting go. It takes effort to overcome inbuilt mechanisms that make us do things that aren’t necessarily good for us. Like quitting smoking (terrible for your health and your pocket), changing our bad money customs and patterns can create positive long-term financial effects.
Here are five of the most common money mistakes and how to rectify them for the benefit of your financial health.
Carrying a balance on your credit card is an easy way to haemorrhage money. Even if you’ve only borrowed a small amount, the longer you take to pay it back, the more it will cost you. Just paying the minimum monthly amount on a £3,000 debt will take years to pay off and will cost you hundreds in interest.
Try to avoid carrying any sort of balance on your credit or prepaid card in the first instance but if it’s too late, every spare penny should go towards paying it off.
In the future, pay off your balance every month, no exceptions and you’ll save a small fortune.
We’ve already mentioned smoking but which other vices are costing you? A £3 coffee each day may not seem like a big deal but over the course of a year that’s £780.
Add in a fiver for lunch and you’re looking at another £1300. A couple of drinks after work a few times a week and it’s another £1250. Total all your unnecessary spending over a year and then divide by your weekly salary. When you see how many weeks you work just to pay for lattes and shop-bought sarnies, we’re sure you’ll cut back.
It’s no coincidence that your eye is drawn to the deal. Point of sale product placement has been carefully devised by teams of highly qualified psychologists to get you spending.
You have to be equally clever in order to avoid these traps. Set some ground rules for purchases – tell yourself if you come back tomorrow and still want it, then you can buy it.
Julian Ford, a professor of psychiatry at the University of Connecticut School of Medicine, suggests creating a mantra along the lines of ‘I only buy what I need’. Saying this to yourself repeatedly may make you think twice.
easy to turn a blind eye to what you’re spending, ignoring statements and hiding from debt. The best way to look after money is to keep on top of it, and Soldo can help you with its real time notifications with every transaction.
[box] Note: You can also turn your cards on or off, set budgets and spending limits. This will help you to stay in control of your finances.[/box]
The UK government is making it a requirement that everyone should have a pension fund. But you should be doing more than the bare minimum – fail to plan for your retirement now and you’ll be left with little or nothing saved.
This is especially true of taking advantage of employer’s contributions, which is equivalent to getting a pay rise or free money every month. Financial advisers recommend that 10% is the minimum for how much you should be putting away.