3 Financial Habits That Are Holding You Back

Financial habits.

We all have them. Some, though, are better than others.

Saving money, living frugally, and paying off debt are all things that will help you become financially successful. But what are the financial habits you should break?

Here's the deal:

Every person who wins with money had to learn good money habits somewhere at some point.

Not all of them came naturally, either. Sometimes you have to learn it the hard way.

But here's the good news:

It's never too late to break a bad habit and put a good one in its place.

So in today's article, we're going to talk about three financial habits you should break.

Mistake 1: Spending More Than You Make

Living within your means.

It sounds so simple, doesn't it? Yet there are so many people who are digging their debt hole deeper or living a paycheck to paycheck.

But if you want to be successful with money, one thing is true:

You have to spend less than you make.

Even if you're budgeting on a small income, you can make this work. Here's what you do:

• Go through every bill to identify leaks in your spending
• Keep track of your spending with a budget
• Cut the unnecessary expenses holding you back (like Starbucks coffee or eating out)

Mistake 2: Failing to Budget

As John Maxwell once said, a budget is you telling your money where to go instead of wondering where it went.

If you want to be financially successful, you have to track your money. There's no other way around it. But, there are a million excuses for why people don't budget:

• I can do it in my head
• I don't have time
• I don't spend that much, so why budget?
• It's too restrictive

But those things are just that - excuses. So if you haven't budgeted before, start by listing out your income and expenses.

Once that's done, you can decide what areas you're doing good in and what areas need improvement. I recommend lining your budget up with these recommended budgeting percentages:

Housing: 25-35%

Insurance): 10-20%

Food: 10-15%

Transportation: 10-15%

Utilities: 5-10%

Savings: 10-15%

Fun: 5-10%

Clothing: 5%

Personal: 5-10%

Mistake 3: Not Having an Emergency Fund

I always say that sh-t happens. It's life. As much as we'd like to prevent it, we can't help when unexpected expenses pop up:

• Your transmission goes out
• A medical expense pops up
• Your water heater dies

These things happen. So failing to plan for the unexpected is one of the biggest financial mistakes you can make. Your emergency fund is essentially your barrier against new debt.

If you don't have one, you're leaving yourself vulnerable to using credit or borrowing from other people. Not good.

So start with a goal to put aside $1000 in your fund. Use your tax refund, bonuses, raises, or sell stuff to make this happen.

Once you've reached that goal, shoot to save 3-6 months worth of household expenses. Even if this takes a while, do it slowly.

Something is better than nothing.

There you have it! Three financial habits you need to break now. Let us know in the comments, which habit(s) are you guilty of?

Thanks for reading.

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