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If you’re constantly finding yourself with no money left at the end of the month or no savings to rely on in emergencies, then this is a sign that you may need to change some of your money habits.

Having good money habits will help you to pay off debts, build up your savings, and reach your financial goals. With a little perseverance and the right information, you can start to develop better money habits for life.

Bad money habits to drop

First, it’s important to talk about a few bad money habits that need to be dropped if you want a better financial future.

Living beyond your means

Living beyond your means is a difficult cycle to get out of once you’ve started. It means that you continuously spend more than you earn which often implies that you have to rely on credit cards to get by month to month. Living beyond your means will make it difficult to save money and you may build up a lot of debt, so this is a really important habit to break if you want to improve your overall financial wellbeing.  

Impulse purchases

If you’re someone who impulse shops on a regular basis, then this could be a reason as to why you’re left short every month. Even if you only buy small and inexpensive items, impulse purchases can really add up and you may be surprised at how much it can amount to over a month. Stopping impulse purchases will allow you to spend more wisely, and potentially save more money too.  

Shopping out of boredom

This is something that all of us have likely experienced over the last year – shopping out of boredom. This is a bad habit to develop as it probably means that you’re spending money on items that you don’t need. Similar to impulse purchases, shopping like this can really get out of hand and build up to a lot of money over the course of a month.

Not saving money

Not saving money on a regular basis means that you’re unlikely to have the money you need in the case of emergencies and you may need to rely on credit to get by.  This can really damage your financial wellbeing and make it more difficult to obtain good credit, like vehicle finance or a mortgage, in the future.

Good money habits to develop

Using a budget

You may associate the term ‘budget’ with strict rules and simply just cutting down spending, but this isn’t the case. A budget is a really useful tool for all areas of money management and it will really enable you to regain control over your finances. You can use a budget to cut down your spending, save money, pay off debt, and make a plan to reach your financial goals.

All you need is a spreadsheet, or simply a pen and paper if you prefer, and your bank statements so you can see all of your income and outgoings. Once you’ve listed your income, your essential expenditure (e.g. rent/mortgage, council tax, energy and water bills, insurance premiums, phone, Wi-Fi etc.) plus your other expenditure (e.g. subscriptions, gym memberships etc.) this will give you an amount leftover each month.

If this is in the red, or you don’t have enough to buy food and fund your lifestyle without having to rely on credit cards, this is living beyond your means. You can use your budget to see where you can cut down spending and make changes in order to start living within your means. You can also use it to work out how much money you can save and put towards debt repayment.

Using a budget is a good habit to develop as it gives you an overview of your monthly finances and allows you to have full control over what’s coming in and going out. You can also adapt your budget to allow for any future changes in finances and to plan ahead.

Saving money regularly

Saving money on a regular basis is a really good habit to develop if you want a healthy financial future. Having money in the bank means that you won’t have to rely on credit cards or loans in emergencies, and you’ll be in a good position and mindset if you want to start saving for something specific like a new car or house deposit.

The easiest ways to start is by automating your savings. This means setting up a standing order from your current account to a savings account for the day after you get paid, whether that’s weekly or monthly. This technique is also known as ‘paying yourself first’ and it makes saving money a priority instead of an afterthought. Use your budget to determine how much you can comfortably afford to save every month as it’s important that you don’t dip in and out of your savings.

Always use a list

If you want to curb impulse purchases and stick to your budget, then you should use a list (and stick to it!) every time that you go to the supermarket. Going in with a plan will stop you from buying things that you don’t need, and it should also cut down the browsing time which often leads to impulse buys.

The 30-day rule

This is a really good habit to develop if you want to stop impulse buying. If you see something that you would like to buy but don’t necessarily need, then write down the item and the date on a rolling 30 day list.

Check this list every so often and re-consider any items that have been on the list for 30 days. I guarantee that most of the items that you thought you wanted and would have bought on impulse, you won’t want now. If you do still genuinely want an item after 30 days, then you can go ahead and purchase it guilt free.

So this is sustainable, set yourself a limit and only allow yourself impulse purchases of under £10 or £5. We all need a treat every now and again and completely restricting yourself on all purchases will be difficult to maintain in the long run.

Leave the cards at home

Using cash instead of your cards is really good way of keeping track of your spending. This is a good tip for grocery shopping, as well as clothes and even Christmas shopping. Set yourself a budget before you go out and then withdraw this amount in cash and leave your debit and credit cards at home. This will make it impossible to go over the budget you set.

If you can develop all, or a combination, of these good money habits then you’ll be setting yourself up for a great financial future.


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