3 Bad Money Habits and How You Can Break Them

Going to start this chain of blog posts where I start to include some of the money habits which I think are unnecessary and completely within our control to break. I may add more habits as I go along and encounter some of them, but here are the first 3 that I've been working on. While I hope they don't apply to you, I hope that you may find some of them useful.

(Image source: http://www.womansday.com/life/work-money/tips/a6793/bad-money-habits/)

Keeping a balance on your credit card

According to MAS, Singaporeans collectively have around $5.4 billion in rollover balances. This is an increase from 2010 when that number was mostly kept below $4 billion. To put this into perspective, this would mean $1,000 of rollover balance each year for each man, woman and child (inclusive of foreign workers and PRs). Since this amount hovers around a similar figure for most of the year, assuming a 2% monthly interest on rollover balances, we are paying almost $240 per person or  $1.3 billion in interest on credit cards alone. Keeping this credit card balance at such a high interest rate is costing us a lot.

How to break it

First would be to get out of credit card debt. You can try moving your money into personal loans, which offer lower interest rates. If the amount that you have accumulated is simply too much to handle, you can try going to a credit counselor and negotiating a debt repayment plan with the bank. After clearing your debt, you should reduce your expenditure. Reduce impulse spending (more covered in a next habit) and as a more extreme measure, you may want to cancel your credit cards to reduce the urge to spend.

Impulse spending

Going through the cycle of wanting something to buying something to regretting after purchasing it and repeating it over and over again is not only mentally tiring, but it also puts a huge toll on our wallet. Some of these moments occur to me when seeing a novelty item in the shop which may seem useful at first but somehow I never get around to using. Or it can also happen with the release of a new product or device such as the iPhone or more recently the Apple Watch . But then after the dust has settled on the purchase, we start to realise that we've wasted our money

How to break it

One of the ways that I think is effective is breaking this habit is just by stepping back from the purchase and waiting at least 24 hours before purchasing it. This would give you sufficient time to think over the purchase and also "tests" the importance of it. If you can still remember it after a day, then it has to have been reasonably important or useful.

Spending money without tracking it

Tracking your expenditures is definitely a useful exercise that would show you under which categories you spend your money on. If you don't track your money, it would be a lot harder to remember your last impulse purchase or how much money you've spent on clothes or entertainment already. Money would just flow out of your pocket or bank account without you giving much thought to it as there are no records and no analysis of spending.

How to break it

This one is quite simple, start keeping track of your spending, maybe start a budget. I did a blog post on it at: Saving - Start knowing where your money goes, which shows the different categories of expenditures that I like to use and ones that you should pay attention to, which can help cut down on your spending

I hope that some of these ideas on breaking the 3 bad money habits highlighted will be able to help you. Also hope to post more posts on more bad money habits that we can start breaking (or you can suggest some that you want highlighted as well).

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