Bad habits are hard to break – especially when it comes to bad money habits. However, learning to manage your money properly is an important skill that all of us should have.
To help you out, we’ve put together a list of bad money habits (and how to break them!) so you can get a fresh start on your finances this year.
Not having a budget/Not sticking to a budget
Though budgeting can seem stressful, it’s actually quite easy. There are plenty of free budgeting tools online to get you started, and many of them allow you to include fun items (shoes, purses, etc.) in your plan. Once you have created a budget – be sure to stick to it. Mint.com is a free service that links your bank and credit card accounts, and keeps track of your spending. You can also input your saving goals, and receive notifications when you go over budget. And the best part? There’s a mobile app so you can easily access your account (that means, no excuses!)
Using credit cards aimlessly
It can be easy to feel like you have all the money in the world when you have a credit card in your hand, but that is obviously not the case. Credit cards are dangerous because they make for easy spending. Be sure to keep track of credit card usage, and to not spend more than you can afford.
Splurging on unnecessary items
Do you really need a third pair of black pumps, or another evening clutch? Probably not. Resist the urge to spend money on stuff you really don’t need. To keep yourself motivated, set aside a separate fund for a splurge-worthy item. That way, if you are tempted to spend on something unnecessary, you can think back to that one item you really want.
Neglecting to put away money into a savings account is one of the biggest money mistakes you can make. Though you may feel like you are stable income-wise, it is still important to save for a rainy day (ie. losing your job). Even if you can only manage to save $20 a month, it’s still a good start. Aim to put away a set amount from each paycheque, and gradually build your way up. Many banks offer “pre-authorized transfer services” that will do this automatically for you.
Not contributing to an RRSP
Even though retirement may seem lightyears away, it’s still good to plan ahead. An RRSP (Registered Retirement Savings Plan) is a tax-sheltered account that allows you save for retirement while lowering your income taxes. If you are able to, be sure to include this as part of your budget plan.