You are average of the five people you spend most time with, says Jim Rohn, American entrepreneur and motivational speaker.
But bad money habits we catch from friends and relatives can cause major financial problems. Problems for us- not them.
These friends and relatives could be well off and might be able to afford those ‘bad’ habits. If you are low on money or tightrope walking on budget, it can spell disaster.
It’s quite likely you’ve already caught these 5 bad money habits. If so, it’s time to get rid of them. If not, here’s how to avoid them.
5 Bad Money Habits to Avoid
These five bad habits seem pretty harmless. Until they start biting your pocket and dent your credit score, that is. Here’s a glance at these five bad money habits. Which is yours? None, I hope.
1. Overspending on Credit Card
A credit card is loan. It’s permission to buy something now and pay later. Unfortunately, a lot of my friends and close relatives consider credit card as their license to spend recklessly.
That’s exactly what a credit card issuer wants. They make it easier to pay for the stuff by offering revolving credit. Meaning, you only need to pay the minimum due amount while carrying forward the balance.
Now credit cards come with Annual Percentage Rate (APR), which is nothing but heavy interest in disguise.
The credit card issuer charges APR on your unpaid balance. And goes on adding while you enjoy paying only the minimum balance as ‘revolving credit’.
Any banker will tell you, credit card APR can run as high as 32 percent per year. This means, you end up paying lot more for the stuff- sometimes double- by means of APR because you didn’t pay off all dues on time.
Revolving credit is a sure debt trap. Avoid falling into this deadly trap that can ruin your finances and peace of mind. Don’t spend recklessly on credit cards just because your friends or relatives are doing it.
2. Delaying Bill Payment
What’s wrong if I miss or delay paying my electricity, phone or cable TV bill? My friends do it all the time and have never had power or cable TV cut.
Fair enough. Paying the bill late means your excellent credit score takes an excellent beating. And for no reason.
It’s rather tempting to delay paying utilities, phone or cable TV bill when there’s no immediate risk of service disconnection.
It gives you some freedom to spend on other stuff. More so if you’re sharing the house, apartment or room and the other person delays payment.
Delaying bill payment damages your credit score. You will have to cough up late payment fees in some cases. Regardless whether another person pays or if you’ve nagging temptations, pay your bills on time.
3. Throwing Away Change
A lot of my friends leave cents, quarters and other coins in supermarket trolleys or fling them into bushes. I was catching this bad money habit from my friends rather quickly.
And doing the same. That is, until I read an article that Americans throw away over $62 billion worth coins. That’s tremendous amount of money.
Over 43.1 million Americans live below poverty line. And throwing away such huge amount of money isn’t quite flattering for anyone.
Especially when these coins could be put to better use by collecting and donating for a worthy cause. Since, I no longer throw away coins. You shouldn’t too. Maybe someone’s life depends on them.
4. Not Having Second Income
My friends don’t need a second income. They’ve enough investments and money stashed away at banks. And it would be shameful to say no to an outing or event with them because I’m working extra to earn money.
Your friends might not require a second income. Now think again. A billionaire has seven sources of income says American business magnate, Warren Buffet.
So, why should I be ashamed of having a second source of income? Even if that means giving away some of my spare time to earn money?
Don’t compromise on a second source of income merely because your friends don’t want one.
5. Spending Heavily on Weekends
Spending heavily on weekends is another bad money habit to avoid catching from friends and relatives. Weekends are for rest and relaxation.
And these can’t be bought by overspending on dating, food, drink, movies or other expensive stuff. The money can definitely find better uses.
I don’t deny your right- or my- to enjoy weekends. There’s lots of activities that can be done without overspending on weekend splashes and binges.
Instead of relaxing, spending binges will actually cause stress. Avoid this at every cost.
The way to build a good credit record and get rich means to develop good money habits. Good money habits come from discipline and self-control.
It means knowing where to spend, how much and when. It also means avoiding bad money habits from others. You could have a big income from a superb job or excellent business.
That’s no justification to get careless about money and pick up bad money habits. Good money habits means proper money management.
It’s a well-known fact that proper money management means stress free life and fewer worries about tomorrow.
Pritam Nagrale, a digital marketer and Generative AI enthusiast, embarked on his journey with affiliate marketing in 2004. With over 14 years of blogging, he has turned his passion into a fortune, profoundly impacting the digital landscape. Through his expertise, Pritam has guided thousands to monetize online and achieve their dreams, establishing himself as a beacon for aspiring digital entrepreneurs.