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There are many challenges you have to face when it comes to money management. We’ve all experienced it in our lives. You look at your bank account and see that you still have some debt left from last year and you have been putting in the effort to earn it. Now it's June and yet you’re still trying to clear all of it. Just how did you get here?
Poor money management is common despite the thousands of people talking over and over again about how to better take care of our finances. Sometimes, all we need is a gentle reminder.
7 poor money management habits you should fix this year
1. Missing bill payment due dates
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Did you know that just by missing your bill payment due dates, you can actually get severely penalised? And it’s not just late fees you can get penalised in the form of your credit score.
Paying your bills late can cause your credit score to plummet, and give you a bad borrower reputation. It’s always good practice to pay your dues such as water, electricity, phone, internet, and more whenever the bill arrives.
Treat your bills like the sickness they are, get them treated quickly!
CHECK OUT: 6 things to do before spending your salary
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2. Committing to something without comparing
If you come across a good deal, it isn't a bad idea to compare it with other sellers if they have something better. Moreover, you should also compare to see if there’s a better product or option somewhere else. In a similar fashion, when it comes to your personal finance, you should also always compare before you commit. Whether it is a personal loan, travel insurance, motor insurance, fixed deposits, or anything that can be compared, get your comparison for the best deal.
3. Not saving money at all
You don’t need to save in the ten-thousands or hundred-thousands. If you’re saving even as little as Shs5,000 a month, it’s still a considerably good habit to practice. When it comes to saving money, it is a good idea to have several goals. Have one for your emergency fund, for your retirement, for your children, and maybe a fun one like a vacation piggy bank.
All that matters is the culture of saving.
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4. Saving obsessively without investing wisely
While saving money is important, it’s also important that you consider investing your money too. Growing your money is important in helping you get extra mileage from your pot and boost your saving morale.
CHECK OUT: How to make forex trading is a viable side gig for you
However, it is important to learn about investment first otherwise you risk throwing away your hard-saved cash.
5. Avoiding a budget
Budgeting might sound like the most boring thing you can ever be told to do, but it’s actually very necessary. It is crucial to keep track of your expenses so that you can control how much you earn and how much you spend. While you may think that your commitments (such as rent, hire purchase, and bills) are only a small fraction of your salary, you’ll be surprised at just how easy it is to lose track of your spending.
6. Borrowing money for questionable reasons
We all need some financing help once in a while. Most of us will resort to taking up loans to pay for our cars, houses, education, business, and so forth. However, if you’re taking up a personal loan to pay for luxuries like a vacation, new furniture, or a wedding, you may want to rethink that move.
Interest rates can back you into a corner and dig you deep into debt. So keep borrowing to necessary and big issues.
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7. Pretending that debt doesn’t exist
Ah, yes, procrastinating and being in denial about your debts. Although looking at the debt balance may trigger your anxiety, it is important to at least check in on what you owe.
Conclusion
On a scale of 1 - 10 (1 being "My entire salary is paying debts" and 10 being "I'm using my investments to fund my investments"), how poor are you at money management? Which poor money management habit are you taking control of first?