Whether you want it or not, money plays an important part in your life. But do you actually manage it effectively or are being somewhat (or very) careless? As the old saying goes, “Money is a good servant, but a bad master”. If you follow this rule, the risk of you getting into financial trouble will be reduced to the possible minimum. How do you do this? Let’s start by outlining the most commonly found bad habits associated with money. Find out what they are and how to avoid them or get rid of them.

  1. Spending more than you earn

This is the fastest way to the bottom, so to speak. Always account for your earnings and make precise plans for spending your income, especially if there is major expenditure coming. Do everything necessary to avoid borrowing money. If you do, make plans for repayment in advance.

  1. Missing to save a portion of your income monthly

You should save enough at least for an emergency fund which you can use in case you have to spend money urgently instead of resorting to borrowing. Generally, the more you save the better shielded you will be from unexpected drop in income and increase in spending

  1. Not preparing a budget

The point of using a budget is to plan and control your spending. In this case, it will be much more difficult for you to spend recklessly and the risk of you getting into trouble will be a lot lower.

  1. Using age as a reason not to invest

When you take measures to manage risk, you can earn a considerable amount of extra income from investing. Age isn’t an excuse to get started. If you are young and don’t have any dependents, you can afford to take somewhat higher risk. If you already have growing savings and have built wealth, you should not miss out on the opportunity to increase it.

  1. Having only a checking account to keep your money in

It is easy to spend more with such an account, especially if you have a debit card with it. Additionally, it brings minimal interest. A savings account, on the other hand, will make more money for you through higher interest.

  1. Not exploiting employer benefits

Most employers offer 401(k) plans for retirement saving to their employees. Such an account is not only tax-qualified, but the employer actually makes contributions to it. There are also plenty of money-saving options. The majority of companies offer health insurance plans too. Some have special child care and transportation benefits.

  1. Trying to copy the lifestyle of other people when you can’t afford it

A famous philosopher once said that people will be truly happy only when they avoid comparing themselves with other. This is more than valid, especially when it comes to money and spending. There are surely plenty of things which make you happier than buying something super expensive just because the guy/girl next door has it.

  1. Borrowing cash from family and friends

It’s true that there is usually no interest, but this doesn’t mean that you can rely on others to manage your money. Besides, you wouldn’t want to risk ruining your relationships with people that truly care about you because can’t be disciplined and control your spending.

  1. Not safeguarding your personal information

Are you filling out your social security number every time when it is asked for even online? If you do, you are at high risk of identity theft. Someone can easily borrow money on your behalf and you will have to pay it back. Take all necessary measures to safeguard yourself.

  1. Engaging in impulse shopping

We are all tempted to do it from time to time, but when it turns into a habit, it can be disastrous. Come up with a technique for evaluating your purchase decision based on your income and budget. Always take the time to think before you buy.

  1. Not keeping check on your student loans

Repaying these should be your number one financial priority upon graduating from college or university. This will help you to start saving for major purchases and to set aside enough money to invest. There are plenty of programs designed to help you repay student debt based on your individual financial circumstances.

  1. Being uninsured or underinsured

Insurance is the most effective way to shield all of your assets from your health to your car and personal belongings. You must not miss to get this kind of financial protection. Shop around to find policies which bring you the best value for money and plan the payment of the premiums accordingly.

  1. Carrying a credit card balance from one month to the next

As interest piles up, it will become ever more difficult to repay and you will get into more and more debt. Your credit score will suffer and you might struggle with your monthly budget too. Come up with a plan for repaying this kind of debt asap.

  1. Using your emergency fund when there isn’t an emergency

You want to get the latest Nike sneakers or a fabulous outfit for your date tonight? Either one isn’t an emergency so you should not be tempted to tap into your fund. Don’t lie to yourself that you will restore the sum later on and remember how hard it was to save it in the first place.

  1. Being clueless about your credit score

This is the single most important indicator showing whether you will be able to borrow money, how much and at what interest rate. Managing your credit score should be a top priority. When it is high, you will be able to get the best credit products including a mortgage loan.

  1. Spending money from your retirement fund

You won’t be paying interest on this money, right? However, by increasing your spending now, you leave less for the future. You wouldn’t want to worry about paying for medication and stuff like that when you get older. Try to be disciplined now.

  1. Making payments late

This brings down your credit score and makes you appear as a less reliable borrower. Besides, you pay more money as interest is charged after the due date. Plan your budget. Create a schedule for bill payment with reminders and follow it strictly.

  1. Avoiding estate planning

If you have built wealth, you need to plan for it, especially when you have dependents. No one likes to deal with writing a will, but you must do it for the sake of your loved ones. Make sure that you use the services of a specialized attorney.

  1. Using the mail to pay bills

We live in the age of mobile communication so this is equal to a crime. You not only waste time, but risk loss and late receipt. Use online and mobile banking instead. You can even set direct debit, if this is convenient for you.

  1. Missing to ask for a pay raise when you deserve it

Yes, this is a bad money habit. Managing your income involves taking measures for increasing it and not only using it carefully. You can readily ask for an increase in your salary in a polite manner using strong evidence to support your request.

Now that you know how to eradicate and stay away from bad money habits, you can focus on implementing what you have just learned.