Financial behavior is the human behavior that is relevant to money management. It is how you manage money and can be healthy or unhealthy.
If you do not have one, creating a spending plan or budget is good financial behavior that can lead to better financial management.
The unhealthy can help us lose track of our spending plan. Avoiding unhealthy financial behaviors can reduce financial stress and help you to win with your finances. Below are some unhealthy financial behaviors to avoid:
Carrying a balance on a credit card. Carrying a balance on a credit card is unhealthy financial behavior. A balance on your credit card can cost you significantly in interest payments, as well as affect your credit score.
I know this blog is about your spending plan and not credit, per se, and a little off-topic. However, credit is nonetheless important in the family finance discussion. We may talk about credit more in the coming months.
Thirty percent of your credit score is based on the balances you carry, so it is important to pay the balance down by either paying it in full or paying more than the minimum due each month.
Additionally, this will minimize the expense of using credit.
If you are paying your balance in full each month, focus on making sure you’re not missing out on all the benefits your card offers.
If your credit card company charges annual fees, make sure the benefits (rewards points, cashback options, gas rewards, or frequent flier miles, for example) outweigh the cost of those annual fees for you.
Bankrate.com is one site that offers comparison for credit cards based on rewards, fees, interest rates, balance transfers, cash back rewards, and many other features or terms.
Purchasing single-serve items. Are you in the habit of purchasing a daily coffee from the coffee shop or snacks and soda from a vending machine? It does not seem like much but over time these small expenses can add up.
For example, daily coffee at $4.00 a day at 5 days a week, 52 weeks a year is $1040. Suppose you save that money, what could you do with $1040? A mini emergency fund perhaps.
As you can see, it may be more cost-effective to purchase items in bulk and then make your coffee at home. Do the same with soda or snacks. What other ideas or tips do you have for a grocery spending plan?
Do nothing. After reading these tips take some action. Brainstorm ideas set some goals and apply what you’ve read. Hopefully, you’re ready to apply some of these tips to your situation. Maybe you still have questions or would like to research more financial tips.
Maybe you feel like you need to speak with a financial coach or counselor.
What is important is that you understand that you can improve your financial health and start taking steps in that direction. The sooner you take action to improve your financial health the better.
Are some of your financial behaviors unhealthy? Take a serious look at them and determine if they are. The first step in solving a problem is finding the problem. These are just a few tips. Can you think more?