Are you committed to making a change and taking control of your finances? Here are 10 expensive habits that prevent you from saving money.
If that is the case with you, how do you go about identifying the loopholes and plugging them?
It all starts with self-reflection and honesty. You can’t lie to yourself or avoid the problem if you ever hope to establish good habits.
Expensive habits and debts
One sure way of falling into debt and remaining poor is to keep feeding your expensive habits.
Let’s face it, spending money is fun. In fact, there is scientific evidence to support this phenomenon.
People who handle money, which is pretty much everybody, can be categorised into two types; those who live for today and those who build for tomorrow.
However, the majority of people fall into the first category. If you are always trading future rewards for present pleasure driven by expensive habits, then you are on your way to living a life of poverty.
This trade-off is actually one of the big differentiators between the rich and the poor. One of the popular pieces of financial advice you can get is to forgo the desire to spend the money today and, instead, sock it away into savings and investments.
That way, you can watch your money grow in value and provide financial resources that can be used in the future to maintain a high current standard of living.
Expensive habits that prevent you from saving money
Expensive habits, more often than not, can be found among certain demography; young people.
When you are young, your primary focus is how to look good and fit in with standards set by society. In doing this, you end up buying the latest gadgets, and designer clothes and living in expensive houses.
This carefree attitude leads you to spend every kobo you earn leaving little to support you down the road.
Other than that, there are other subtle habits that may seem ordinary but are expensive.
Below are 10 of them:
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Eating out
Millennials and Gen Zs generally have one big problem; cooking and packing their own breakfast or launch.
A large part of this habit is ascribed, not to laziness as most would think, but to busy schedules.
And with more delivery apps than ever before, it’s hard to resist the temptation to get my favourite foods from local eateries.
Although it is easier and more convenient, eating out is one of the most expensive habits that prevent you from saving money.
Estimates show that you will spend five times more eating out than if you cook at home! Not only is the food more expensive, but you also need to include the service and delivery costs as well.
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Impulse buying
So much has been said about impulse spending and its tendency to lead one into debt. Another bad spending habit, impulse buying involves making unplanned purchases outside of your budget.
Even the most frugal shoppers may find themselves buying things they don’t need.
Impulse buying is bad for your finances. To curb this habit, people have been advised to make a shopping list and stick to it.
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Funding your lifestyle with loans
If you don’t understand how loans work, relying on them could ruin your finances. Sure, they make like simpler and are easily accessible.
But it’s also easy to lose track of how much you have spent and how much you owe in interest.
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Habits
By habits, we mean addictions. In today’s world, many have turned to vices to take the edge off. However, personal vices such as smoking, drinking, gambling, or junk food are costing you more than you realize.
Not only are they addictive, but they negatively impact your physical and financial health. If you overindulge in your vices, you could be taking years off your life and money out of your pocket.
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Late payments
Whether it’s a loan or a recurring bill like a power or streaming subscription, deferring payments when they are due will hurt your finances.
Making late payments is a steep habit that undermines your savings goals. Not paying your bills on time creates extra expenses.
If you have several late payments, it can rack up thousands f naira in unnecessary expenses. It will also affect your credit score.
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Unused memberships/subscriptions
You may not be aware of this, but the amount you spend on membership and subscription rates is shocking. This includes the amount wasted on unused memberships.
Most subscriptions have automatic renewals, so you may not know or remember to cancel them. If you are that person, take the time now to review all your subscriptions, whether it’s a gym membership or a streaming service, and cancel them.
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No haggling
Buying a product without negotiating the price is an exclusive preserve of the rich. When making a purchase, except in places where it is not allowed like a supermarket, the rule is to negotiate the price.
Haggling can save you a lot of money.
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Online shopping
This is an offshoot of impulse buying. If you have the tendency to buy things on a whim, then as much as possible, stay away from online shopping.
The convenience and ease, coupled with the door delivery service will deplete your funds faster than you can blink.
Shopping online is deadly for anyone who struggles with impulse buying. With the click of a mouse, you can spend tens of thousands of naira without even standing up.
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Ignoring financial statements
It’s easy to toss financial statements and account notices aside. But ignoring a problem won’t make it go away. Those who are having financial struggles know how small issues can grow into huge problems.
That’s why it’s so important to review your monthly statements. If there are additional charges, fees, or anything out of the norm, call your financial institution right away.
If you put it off too long, you may be left paying for someone else’s mistakes.
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Delaying investing
Why haven’t you started saving or growing your investment portfolio?
Not saving money is perhaps the most expensive habit that prevents you from financial stability. Unless you are independently wealthy, you need to invest to save enough for retirement. Otherwise, you are sabotaging yourself and your future.
How to make better savings decisions
Having identified some of the habits that may be limiting you from saving, the best time to launch yourself is now.
As a beginner, you may want to set small, achievable short-term goals before advancing into something big.
You may start with something fun that goes beyond your monthly budget, such as a new smartphone. Reaching smaller goals and enjoying the reward you’ve saved for can give you a psychological boost, making the payoff of saving more immediate and reinforcing the habit.
Also listed below are some tips to help you make better-saving decisions.
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Record your expenses
The first step to start saving money is figuring out how much you spend. By keeping track of all your expenses, you can make better decisions regarding what is not immediately necessary and what can be pruned down.
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Include saving in your budget
Now that you know what you spend in a month, you can begin to factor your savings into your monthly expenditure.
Include a savings category in your budget and aim to save an amount that initially feels comfortable to you.
Plan on eventually increasing your savings by up to 15 to 20 percent of your income.
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Review recurring charges
As stated, to make the best of your saving journey, you should cancel subscriptions and memberships you don’t use, especially if they renew automatically.
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Wait before you buy
If you find yourself caught in the net of impulse buying, especially for a nonessential purchase, wait a few days. You may realize the item was something you wanted rather than needed and you can develop a plan to save for it.
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Automate your savings
Almost all banks and online savings platforms offer automated transfers between your savings accounts.
You can choose when, how much and where to transfer money or even split your direct deposit so that a portion of your income goes directly into your savings account.
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