5 Bad Money Habits to Break for Better Savings

Saving money can be difficult when you have bad spending habits, and breaking them is essential to reaching your financial goals – whether they include building an emergency fund, saving for a down payment on a house, or planning for retirement.

Overspending on Non-Essential Items

    Spending money on items you desire but don’t require can quickly add up, leaving less for savings or emergency savings plans. To break the cycle of overspending, create a budget with an allotment for discretionary spending. Before making purchases, ask yourself if it meets an immediate need or not; and if it’s a want, assess if it fits within your savings without draining away funds from them.

    No Budget

      It can be challenging to track expenses and ensure you’re saving enough every month, without a budget in place. A budget enables you to prioritize spending while allocating funds towards meeting savings goals.

      Make a budget that includes your income, fixed expenses (rent/bills/utilities, etc), variable expenses such as groceries/gas etc, and savings. Stick with this budget plan while making any necessary modifications as your financial circumstances change.

      Impulse Buying

        Impulsive purchasing can derail your savings goals quickly. It’s easy to become distracted at the moment and make purchases that you later come to regret. Make a shopping list before heading out, and stick with it. If something catches your eye that fits within your budget and should be purchased, wait two or three days before making your decision. This allows time for contemplation.

        Not Saving Automatically

          Automating your savings is an effective way of making sure you set aside money every month towards your savings goals. Automating is an ideal way of making sure you set aside a regular sum.

          Establish automatic transfers from your checking to savings accounts on payday, so the money remains out of sight and less tempting for spending.

          Are You Confronting Credit Card Debt

            Credit card debt can be an immense barrier to saving money. Interest payments on balances quickly add up and leave less funds available for savings goals. Create a plan to quickly eliminate credit card debt. Consider moving balances onto cards with lower interest rates or using the snowball/avalanche method of repaying debts. Once debt-free, avoid using credit cards for purchases you cannot pay off in full each month.

            Breaking bad money habits takes effort, but the result can be rewarding. By limiting overspending, setting a budget, resisting impulse buys, automating savings plans, and managing credit card debt effectively, you will soon be on your way to building up a healthy savings account and reaching your financial goals.

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