Bad Spending Habits and Ways to Break them

“The best way to break a bad habit is to drop it.” – Leo Aikman

Here’s the thing, habits either good or bad come naturally to us and can be got damn difficult to break until we really make an effort. Well there’s no question to put that effort for a good habit but the bad ones over time can prove to be fatal. Take bad spending habit for instance. The way you spend money has a huge impact on your financial wellness. Bad spending habits can keep you in debt and stop you from reaching your financial goals. But sometimes it may so happen that you may completely fail to assess what your bad spending practices are, forget about rectifying them.

That’s where this post will help you. We’ll show you some of the most common bad spending habits that you may be practicing without even realising. We will also help you with how to fix them. If you want financial success, go ahead and identify your bad spending practices and then you can create a plan to deal with them.

Are you going over budget?

Sticking to budget can be tricky but it’s so crucial for our financial well being. Are you constantly feeling broke within few days after you receive your paycheck or in the middle of the month? Then you probably have a bad spending habit (or no savings plan) that you need to fix. Because going over budget consistently isn’t good because it could mean you’re spending more money than you earn which can lead to debt. To fix this, you need to track your spending on a daily or weekly basis and readjust your budget accordingly. If you know you are spending too much money dining out or you are spending lots on lunch every day, you need to look for an alternate option (have a good cook instead). You can also try using the cash envelope system for specific budget categories as well to ensure you don’t overspend. The trick is to set aside budget for major activities of the day. Another trick is to automate your savings. It’s like saving first, spending later. You can check with your bank to have a portion of your paycheck automatically deducted and sent to your savings account instead of putting the entire sum in your checking account.

Are you wasting money on services you don’t use?

Paying for something you don’t use is just like taking your hard-earned money and throwing it into the garbage. And why would anyone continue to do that! That year-long gym membership (you
barely visited for a month), the newspaper subscription (aren’t you always on the internet), the cable subscription (when was the last time you watched television), all this is eating up your money.

Sometimes certain products and services sound nice or they’re a trend and everyone is paying for them. Or, you may think that one day you’re going to use them, but that one day never comes because you’re just too busy or it isn’t a priority. Identify them and get rid of them at once. Instead of these subscriptions you may enrol yourself to something that you enjoy and would attend on a daily basis. A trend is easy let go but not your favourite hobby! Just be honest to yourself.

Are you into impulse buying?

Impulse buying is bad news and it is hardest to break. Making unplanned purchases based on emotion instead of spending mindfully can pull your budget and finances way down. Making excuses to shop just that sale is on or filling your cart with stuff that you will probably never use or dropping buy at an ‘over-priced’ cafe to grab brunch are signs that you are an impulsive buyer. There’s
nothing wrong with spending money those ways, but if you regularly make unplanned purchases on impulse, they can really add up and affect your finances. If you don’t want to spend all your extra money on random knick knacks that you didn’t really even want or need to buy, you’ll have to stop spending on impulse and plan your spending better. You can create a miscellaneous budget category that you stick to for extra, unplanned purchases. You could cross check couple of times to the items in your cart to ensure that you actually need the items and don’t just want to buy it based on a temporary emotion that will leave you regretting the purchase later. All these are ways to curb your tempt of buying. And most importantly stop using your credit card. No seriously! Paying for everything you buy with a credit card can be good practice if you pay off your card every month. If you’re swiping your credit card for things you can’t afford to pay off by the next billing cycle, leave your card at home and use cash instead. That way you also save on paying interest charges.

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Tips to curtail your expenses during festivals

Although we Indians celebrate festivals all year long, the important ones begin this time of the year i.e. with Ganesh Chaturthi. Festivities are times for revelry with family and friends. While you get all excited to spruce up your home during this time, you also expect to bring about a change in your own monotonous life.
And why not! After all festivals are believed to bring joy & prosperity in our lives. But what about the pocket-crunching expenses they bring along – gifts, baksheesh, mithai, and what not. All this is hard to avoid. And if you are extravagant and generous during the festive season, it may cost you dearly later. So, here are few tips to strike a balance between indulging in festivity and not burning a hole in your pocket.

Power of recycling

In the age of strong branding, festive sale and brands alluring you with all kinds of promise and discounts, there’s a bunch of new-age ‘janta’ or Instagrammars who are telling you to give importance to recycling. And what special occasion then Diwali or Navratri. Home-made drapes of beautiful old sarees can be a substitute for brand new curtains, repaint diyas from last Diwali to give them a new look, make paper lamps by colouring newspapers. Take help from friends or family or Google, even better to pick some innovative recycling ideas that can save your money, yet keep the festival spirit on.
You can apply the same trick while gifting someone – try the DIY ideas of homemade chocolates or handmade wall pieces or lamps. There are ready materials available which comes cheaper! All it needs is a little bit of your time and a lot of enthusiasm.

Shop online or off season –

Shopping is one of the major budget eaters during festival. Clothes for the family, furniture or appliances for the home, jewellery to mark the auspicious occasion and there’s no stopping. Now how does one place a budget for all this? We understand the sentiment of buying new clothes and all other stuff and we aren’t asking you to recycle this time. But what if we tell you to shop a while before the occasion. We all know the meaning of sale so let’s not fall for that and be shopping ready months before the festivals arrive.
Also, instead of going to the expensive stores in malls, you can also check out deals available online. With India going digital, e-tailers are competing among themselves to sweeten the deal for the customer. So don't miss out on this opportunity of getting some great deals on clothes and accessories online. And always, always have a fixed budget for your shopping!

Don’t make bonus part of the celebration

Bonus is a yearly thing and it’s meant to be put into good use. Most splurge away bonus they receive and that’s a mistake. Bonus is a lump sum amount and to avoid its use, one should put it immediately to fixed deposit or put it in a high-return investment vehicle like SIP investment and let it grow over a period of time.
This will in fact help loosen up your budget for next festive season. Carry this same cycle every year and your festival expenses can gradually come under control.

Organize parties / gatherings at home

Festivity is the time to relax, time to gather around friends and family and basically have a good time. Now instead of queuing up in front of expensive restaurants on Diwali night or other festive time, you can always plan for a house party where all your friends or relatives can get together and have fun together.
Since potluck is a trend these days, you can suggest the same during this time where all the party guests can bring in their own special dishes and make it a buffet treat for everyone. Sounds delicious!

By implementing these simple yet effective ideas you will not only save a lot of money, but also ensure that you haven’t gone overboard with your festive spends. Besides, festivity is all about spending quality time with your loved ones, so as long as they are around it’s always happy and merry celebration!

Looking for more ideas on festival budgeting speak to our financial fitness expert here or you can also mail us.