Here’s how to end bad habits and start cleaning up your finances

Everyone can fall into bad habits. It’s part of the human experience. Bad habits with money often develop early in life, and it can be difficult to change them even if you know what is happening. These days many people live paycheck to paycheck and bad financial habits can end up costing you money and landing you in serious debt, so, how can you break the bad habits and turn it around?

Track what you spend

There’s a common saying that the first step in solving a problem is admitting that you have one. In order to understand all of your bad spending habits, you should track what you spend and identify what is going on.

Clean up the habits

Routine is often the reason for bad spending habits. These can include having a drink on a Friday night, over-indulging in retail therapy, or buying breakfast on the way to work every morning. By changing some of the patterns of what you do, you can change what you spend without even noticing it. If you change a habit you can change the amount you’re spending.

Make it easy to save

One of the oldest mantras in saving is to save on payday. Get a proportion of your payday money going into a savings account. Additionally, stop paying for things by cheque and move to automatic bill payments.

By doing these two things, you will have a better grasp further how much money you have day-to-day and will also be setting aside savings. For your regular spending money, you can keep a current account where you send just a bit above what you need for your monthly expenditure every month, after creating your monthly budget.

Watch out for negative influences

You may have co-workers, friends and family who have more money than you or have bad habits themselves. If the people around you are particularly materialistic, that will encourage you to be so as well. Be aware of the influences that shape your view of spending and make sure that you are doing what is right for you.

Assess yourself

Be brutally honest about how you are with money. Look at both the big and small habits and prioritise anything that you think needs to change. Be prepared to have a bit of an emotional hit as you potentially realise that you spend more than you earn, but take it on the chin and prepare for better habits in the future.

Sort things out immediately

If there are small financial issues, the best way of dealing with them is straight away before they become bigger issues in the future. Take a look at your credit score and see if there are any priority debts that you need to sort, and negotiate with anyone if you do have problems meeting up with payments. Get off high-interest credit as soon as you can and do this by putting the money saved towards your debts as that will have a compounding effect on making things better as you’ll be gradually be saving more money.

Take small steps

You don’t need to take huge steps straightaway. Mostly, it is the small changes that have the biggest effects. Gradually build up more good habits and eliminate those that are causing problems one by one and move yourself to a better financial position.

Final thoughts on eliminating those bad financial habits

Sometimes the bad financial habits are difficult to identify. Financial habits become embedded in life, and sometimes it takes looking at the behaviours around them and the daily activities that you push you to understand where the finances are going awry. Certain activities require certain financial outlay, and if the activity is not important to you, you can stop the activity to stop that financial commitment.