Money a little tight these days? You might assume it's due to rising costs, tightening credit and the fact you haven't had a raise in, like, forever. But truthfully, if your basic needs are being met, problems you're having are more likely a result of bad money habits you've picked up- behaviors you've repeated so often they've become almost automatic.
Don't despair. In the same way you picked them up, you can replace bad habits with good ones: Stop the old behavior, and consciously repeat the new one so often that it becomes an almost automatic response.
-Bad Habit: Living without a spending plan.
Spending money without a plan has to be the mother of all bad money habits. It's like driving blindfolded. You don't know where you are and can't see where you're going, so you don't know when to stop. Pre-spending your paycheck on paper (also known as a budget) is the way to remove the blindfold so you can see what's going on.
-Bad Habit: Paying with plastic.
Depending on plastic - and I'm talking about both debit and credit cards - to cover your day-to-day spending might be very convenient, but it creates a bad habit. You stop noticing how much you're spending, and that opens the door to overspending. Break this habit by figuring out how much cash you'll need for the day, and put that much in your wallet. Leave your plastic at home, or put it in a less convenient place in your handbag or wallet.
-Bad Habit: Rolling a credit card balance.
Credit card issuers know that once they can get you to cross the threshold where you owe more on your credit card than you can pay in a single month, they've got you where they want you- paying them interest month after month.
If you cannot pay the entire balance in a single month, you need to get rid of that credit card. Cut it up (do not close the account or you could be looking at a big interest-rate increase). Start paying down the balance as rapidly as possible, ignoring the minimum monthly payment amount.
-Bad Habit: Waiting until the end of the month to save.
It might make sense to pay your bills first and then see how much you have left to put in savings, but that's a really dumb idea. It will lead to a very bad habit also known as no savings, because you will keep doing this same dumb thing month after month, year after year.
To break this habit, pay yourself first before you pay any of your bills. In fact, treat yourself as your most important creditor. Make up payment coupons like you have for your car payment. Or set up an auto bill payment to "Myself." Now move "Myself" to the front of the line so that the very first bill you pay each month is to You! Even if it's only $25 - or even $10 - to start with, do it. Over and over again.