6 Unhealthy Financial Habits That Are Keeping You In Debt
Listening to people’s financial problems is part of my role as a Financial Planner. No matter what the circumstances, debt certainly plays a big role in everyone’s situation. Australia is fast becoming the nation with the highest household debt. And many have more debt than they can pay off.
Unfortunately, most of us are only paying the bare minimum, which is simply not enough! In order to see change, you need to start with an understanding of what’s keeping you behind.
For many of us, our financial habits keep us in cycles of debt. To break free from this, we need to look at our mindset and behaviors.
1. Being ruled by your emotions
We’ve all been there. Impulse buying to help us feel better. It’s a quick way to boost your spirits and feel temporary pleasure. But money should not be your emotional Band-Aid.
In fact, we all know that feeling of guilt and regret that often makes us feel worse after an emotional buy. The next time you feel tempted to spend, ask yourself if you really need the item. In some cases, we even spend money we haven’t earned by using our credit cards or After pay. The key is to think of money in a more objective and realistic manner. Avoid rationalising your impulse buys by telling yourself that you deserved it. What you deserve most is financial security!
You’ll be surprised to see how much you can save by not letting your emotions rule your wallet.
2. Relying on credit cards
These days it’s all too easy to keep swiping away when you’re out shopping. The problem occurs when you swipe and don’t realize how much you’re spending. Come payday and the money is no longer yours. Losing control over your money before it hits your pocket is scary.
Most people I meet aren’t smart swipers and they often blame their cards for their debt. I’m not against credit cards when used correctly but you need to find the right balance. Figure out what you can and cannot afford. Be realistic about your financial situation and limitations. Swipe smartly and try to use your debit card instead.
3. Not budgeting
Budgeting can be a beautiful thing. Yes, it may take a few hours each month, but that time will be well translated into money. Budgeting is as simple as keeping track of your earnings and spending. This naturally paves the way for savings. I often hear people say, “I had this much money and I don’t know where it went.”
That is what happens when you aren’t keeping track. You need a budget that you can stick to. Figure out how much you will earn and how much of it will be spent on your monthly expenses. If you aren’t left with much after your expenses, then you need to try and change your way of living. This may mean a cheaper mobile phone plan, using less energy or simply staying in more often.
Another option is to multiply your source of income. Get a second job or sell items that you no longer need using Facebook Marketplace or Gumtree.
4. Trusting only in savings
The Australian dollar is at an all-time low and as inflation rises, your money devalues. Relying on savings only is no longer an option. Using strategic investments can help you multiply your income and save your money from the effect of time.
You don’t necessarily have to go for high-risk investments. A good financial adviser can help you find investment options based on your current financial situation and your future goals.
5. Not getting help
Most people prefer not to talk about money. And when money becomes a source of distress, they feel embarrassed and avoid the topic altogether. Not acknowledging your problems can only make them worse. The sooner you seek help, the sooner you will find a solution.
Talk about your financial challenges with a trusted friend, family member or find an objective financial adviser. Someone with sound financial knowledge can help you manage your debt and put your money to good use.
6. Feeling negative about money
Your money mindset often controls your money patterns and habits. Many times, we develop negative money thoughts during childhood. We then carry these negative thoughts and beliefs into adulthood…so it’s no surprise that some of us struggle with debt.
Fortunately, you can change these sabotaging thoughts and develop positive habits. Start by being self-aware and try to catch your limiting thoughts and beliefs. It can help to talk to a money coach to help you develop strategies to reframe your thinking and get you closer to your financial goals. Once you leave your limiting self-doubt and negative money talk behind, you’ll start thinking before you make unwise purchases.
Changing old habits isn’t easy but with the right tools and support, you can rewire your relationship with money. I’ve helped hundreds of men and women create lasting change in their financial lives by giving them practical real-world tips and advice.
A secure financial future doesn’t have to be a dream. And I’m here to tell you that it is achievable!
If you’d like me to guide you on your financial journey, start by reaching out using my social media channels or alternatively send me a quick email at tamara@truejourneyfinancial.com.au or on 0403466330. Or if you have a friend, client or colleague who could use some encouragement or benefit from this article, please pass this along.