With the summer winding down, there’s only so much of 2018 left. If you plan on finishing the year off strong — even after the expensive holidays — you need to remove these bad habits from your life.
Spending as much as you make
One of the most common mistakes made by those with tight finances is spending as much as they earn. Otherwise known as living paycheck to paycheck, this lifestyle results in a zero-sum game that makes savings an impossibility. More still, it makes it impossible for you to do anything more than meet your basic needs from month to month.
If you spend as much as you make (or more), you need to start living within your financial means. This may mean you need to sacrifice some of the things you’ve come to expect each day—like that morning latte before work or splurging on organic produce.
Going without a budget
It’s usually a big-ticket item that comes to mind when people try to think of ways they’re overextending themselves financially — a home reno or a new big screen TV. While stand-out expenses can make your financial condition obvious, few people can blame an extravagant lifestyle filled with designer clothes, Michelin star-rated meals, and foreign vacations for their financial issues.
Most people deal with a handful of small purchases that throw their finances into a tailspin. On their own, these individual purchases have no impact on your finances, but together, they can use up savings and eat into your paycheck.
A budget helps you sniff out these financial mistakes by committing every expense to paper. Once you can account for months’ worth of expenses, you’ll be able to see patterns in your spending habits. Eliminate any of those that don’t serve any other purpose than to waste your money and use this cash to put towards paying down debts and building savings.
Dipping into savings
Not all savings are created equal. The kind of savings you have will depend on your goals. A basic savings account covers short-term goals like going on a holiday or buying a new car.You’ll be expected to make regular withdrawals from this kind of account as you need to pay for things.
Beyond these aspirations, there are specialized savings accounts to help you prepare for the future. Investments, 401(k)s, and other retirement programs help you save for long-term goals. You aren’t meant to withdraw money from these accounts until you retire. Not only does it harm your chances of preparing for your retirement properly, but you’ll also face steep penalties. Most IRAs come with conditions preventing you from taking out money before you’re 59 and a half. Your withdrawals will also add to your taxable income for the year.
To avoid these penalties, keep these long-term savings where they are and try a fast-acting payday loan online as an alternative. You can find a cash advance online from lenders like MoneyKey that are made specifically for urgent bills and repairs — like an unexpected fender bender. Since they operate primarily online, they can avoid most of the barriers delaying or preventing you from getting the help you need, when you need it. Their online platform means they can process your request 24/7, and in most cases, you can receive your loan in one business day.
Making only the minimum payment on bills
Bills are an inevitability of your life. Everyone has them, but it’s how you pay them off that sets you apart. Most credit cards ask you to make a minimum payment against your balance. What you owe is usually a percentage of your credit card bill, but in some cases, it may be a flat rate of $10–30. When you’re on a tight budget, it may be tempting to pay this minimum payment only.
However, don’t think you’re getting away with paying only a tiny fraction of what you owe. When you pay only the minimum, you’re adding interest to your debt. Not only will this keep you in debt for longer, it could also end up hurting your credit score. Avoid these consequences by paying more than the bare minimum. If paying off your credit card isn’t within your reach, try paying twice the amount of the minimum. This strategy will slash your repayment period in half.
You don’t have to eliminate each of these habits all at once. Even starting small will help you take control of your finances in what remains of 2018. So take that first step towards banishing toxic financial behavior from your life and be ready to finish the year off strong!