Admit it: we all have one or more financial habits that need to be broken, but are still hard to break. Human beings as a whole tend to be creatures of habit, and unfortunately, unlike benign habits such as watching a certain show every night, or having your morning tea, financial habits that can harm your bank account and credit score are highly important to break in order to achieve true financial stability.
Some of these habits seem obvious, whereas with others, you may not even know you’re doing them. Here are some of these bad financial habits, and tips on how to break them.
- Don’t spend more than you earn. This seems like a no-brainer, right? While many people following the news might have their own opinions on the government’s fiscal deficit, you should be paying far more attention to your own personal deficit. According to surveys, one in five Americans spend more than they earn. Don’t be part of that one-fifth and you’ll be good.
- Pay your bills on time. Here’s an interesting fact that many might not even know: one-third of your credit score comes from your ability to pay your bills on time, whether they be for your credit card, student loan debt, utilities for your home, and so on. Make sure these bills are always paid on time, and if a collections agency calls for any reason, pick up and talk to them and work out a payment plan.
- Don’t treat your credit card like it’s free money. When you apply for a credit card, you might feel a sense of relief – you have a way to purchase items without having to dip into your checking or savings account, and you get to reap the rewards that come with it. However, too many people treat their credit card as though it’s free money. Unfortunately, by doing that, you risk maxing out your card and suffering higher interest rates. Keep in mind: life is not a DJ Khaled video, and using your credit card for luxury experiences (unless you can genuinely afford it) will certainly damage your credit history.
- Make more of an effort to actually save money. At Polam, we have our Vantage savings account that you can link to your Vantage checking account. This makes it easy for you to schedule regular transfers from checking to savings, without you even having to think about that. You can even do manual transfers both with online banking and mobile banking.