Breaking Bad Money Habits

It’s easy to say that we all pick up bad habits during the course of life, none more so than when it comes to our finances. Maybe you’ve got a freshly brewed flat white habit that has become a daily occurrence, or you walk past a bakery on the way home from work that you just can’t resist a look. Whatever your Achilles heel is, have you stopped to think about the real cost of these small treats on your weekly or monthly spend? If not, then it’s something you should start to consider for the good of your financial health. According to the Financial Capability Survey, 39% ofadults in the UK do not feel confident when managing their money. With that in mind, breaking those bad habits is the key to be able to open up a better financial future, so what can you do?

Borrow Only When You Need To

This is especially important when you’re looking to borrow money, as you want to ensure the lending product is right for you. A payday loan, for example, can help you in an emergency situation if you need money in an instant. If you’re in between salary dates and do not have the available savings, this type of emergency funding can provide support, but it shouldn’t be taken on without caution. Of course, you’ll want to ensure you’ll be able to keep up with repayments, whether you’re looking to take out £200 or £1000. Taking out only what you need rather than the maximum available to you is another good way to create better money habits.

Review Your Finances

The best way to review if that coffee habit is getting out of control is to spend time going through your income and your outgoings. Yes, this may take some time to go through for someone who hasn’t done so before, but it is worth it to start creating good habits. With overdraft costs increasing from April 2020 due to new FCA rules, the cost of mismanaging your bank account and outgoings is set to cost more, especially if you’re someone that lives within their overdraft limit.

As it may seem daunting going through all your income and outgoing costs, there are helpful online calculators that can help you do this more effectively, such as with the Money Advice Service and Citizens Advice. The result should leave you with a figure of what you have leftover to use towards any further lending or for saving. It will also highlight areas you may have not realised are costing you a fortune. If you’re the type of person that prefers to buy your lunch at work every day rather than prepare it from home, you may be surprised how much you’re spending on this habit. You may have had an idea approximately how much you spend, but fully going through your outgoings can help to put these costs into context, showing your weekly, monthly and yearly spend. For some, this may provide a sobering reflection to finally break those bad habits.

Research shows that workers spend, on average £6.08 during their lunch break. Yet this outgoing goes up significantly, depending on where you live and work. Londoners are expected to spend an amazing £15.51 at lunchtime. This can add up to an incredible £77.55 per week, and approximately, £348.98 per month. Simply cutting your lunchtime spending down could help you make better financial habits and could protect your finances, allowing you to build up a financial cushion to ensure things like short term loans only become an option in a financial emergency as a last resort.

Start to Save

Creating good money-saving habits is a goal for many people, but not always easy in practice. Finding the right balance is key as you’ll need to still have enough money each month to afford your monthly outgoings. There are many ways to help start those good money savings habits. Many bank accounts have a feature to automatically “sweep” any money in your account into a savings account at the end of the month. This isn’t ideal for everyone but is one way you can place even a small amount into savings regularly. If you’ve resisted the urge to buy that takeaway coffee at work today, why not put that amount into savings instead? Even just a few pounds a day can quickly mount up at the end of the week or month. However, you choose to start saving the pennies, in the long term you’ll benefit from having money to fall back on.

Recognise Your Impulses

Being able to recognise you have bad money habits can, for some, be tough. You may not have a daily coffee habit like some; however, you can’t resist an online shopping deal. Whether it’s buying clothes, eating out or having regular weekends away, everyone has something that they probably spend too much on. Taking the step to recognise bad money habits sooner rather than later can ensure your money is being used efficiently. If you’re currently on a low income or have low affordability, nipping these impulses to spend money quickly will benefit you in the long term.

Here at Wizzcash, we want to ensure that our customers make better choices and create better money habits. As responsible lenders, we provide emergency loans when you need financial help. However, we always look to protect you by running affordability and credit checks before you are approved. For more related articles, please follow the links below: