With personal finance, the habits we have can either make us successful or cause us to stagnate. If you have been struggling with your finances, take a look at this list and make sure you are not bringing yourself down with any of these habits;
1. Procrastination
Are you one of those “I’ll start saving tomorrow” kind of people. We all procrastinate at times but there are people who are always telling themselves they will do something later or the next day. Procrastinating is one of those habits that may end up costing you not only time but money as well.
Here are a couple of ways that you procrastinating your financial freedom;
- Paying your bills and loans late causing you to have to pay more money as interest.
- Purchasing certain things late e.g event tickets, plane tickets thus you end up buying with the highest price.
- Never settling on a financial plan or taking a decision to save/invest when the stakes are good.
- Not preparing a monthly budget on time and by the time you get your income, you end up spending impulsively.
Do you know any other ways people procrastinate their financial freedom? Feel free to share them in the comment section below.
2. Impulse Buying
Giving in into impulse buying is not only hard on your wallet in the short term but it also prevents you from developing good financial practices in the long term. It is okay to treat yourself once in a while but it is important to be clear about what you want and what you need.
Here are some reasons why people impulse buy;
- Buying items on sale to ‘save money’ even if you do not really need them.
- You want to fit into trends so as to conform to your friends and the society.
- Doing too much window shopping both online and at physical stores.
You can avoid impulse buying by;
- Planning for big purchases
- Knowing your triggers, what makes you impulse buy?
- Finding ways to treat and reward yourself without spending money.
- Remembering the past losses that you made from impulse buying.
- Budgeting always.
- Carrying fixed cash and avoiding having too much cash in your MPESA or shopping using your bank card
- Setting financial goals and following through.
3. Ignorance
There is nothing worse than being ignorant or uneducated with your personal money matters. No one expects you can be an expert on finance but at least gain knowledge on the basics of investments, savings, mortgages, insurance, budget, interest rates, etc.
There is no excuse for ignorance, it is actually costly when you hit 50, you’ve had a great career but you have nothing to show for it. Take some time to educate yourself on things like banking, interests, unit trusts, shares and insurance. The internet is at your fingertips with all this information and we are also here to help.
Instead of watching too much T.V and talking about politics all day long, pick a book on finance and investment or take up a personal finance course. Your future self will thank you for it.
4. Not saving for retirement
When you are young, in your 20’s, through your 30’s, it is easy to think that you have your whole life ahead of you. We’ll, just ask someone who is 60 and they will tell you that if they could, they would save for their retirement from as early as their first salary.
Most jobs both in the public and private sector provide you with a retirement/pension scheme but that isn’t entirely enough. It limits you to what you can and cannot do in your old age because you have to wait for a fixed monthly deposit which isn’t much.
At that stage of your life, you want to be independent and have a fairly comfortable life. Please don’t keep living without a retirement plan. The earlier you start, the better. As you try to make ends meet and achieve your financial goals, put a retirement plan in the equation.
5. Ignoring Insurance
I know that insurance has a bad reputation in Kenya and love it or hate it, insurance is an important part of any financial plan. Basic insurance you shouldn’t ignore is health insurance and insuring valuable property such as your car or house.
We cannot control everything that happens and that is why insurance is important, to prepare you for the worst. One accident can totally wipe out your investments.
However, before settling on an insurance cover, do your research and ask people who have been insured before preferably close friends for their honest opinion on certain policies.
Final Word
Are you guilty of any of the above habits? If you know any other detrimental money habits, feel free to share them in the comment section below.
