A habit is “an acquired behavior pattern regularly followed until it has become almost involuntary.” Thus, anything that you do regularly – eating chocolate, not balancing your checkbook or spending far too much money is a habit. Some are best left behind in the great Dustbin of Forgotten Habits for reasons of health (smoking), mental tranquility (negative self-talk), obesity (a gallon of ice cream per day), work success (procrastination), and an unending host of others that fill volumes of psycho-babble self-help books.
To simplify the world of personal finances, we can break down consumers into two types: those who are good with money and those who are bad with money. Certainly there is an infinite range along that continuum, but if you have good financial habits then you are better at spending and saving money – the opposite is true if you have bad financial habits. So place yourself on that continuum and if you fall consider yourself far from the “good financial habit” point then the following may help you become more financially secure.
Get Low Interest Credit: Do an analysis of all your credit cards, car and home loans, department store cards and bank accounts. Make a list of everything with balances, due dates, maximum balances and monthly payments. If all you have is high interest credit cards then get a credit union account, a credit card from the credit union and transfer your balances to them; If you want to consolidate your loans, try Peer-to-peer lending (check out Peerform) at a low interest rate – getting rid of the high interest payments is a first step in having more money.
Loan Shark App: Use the Loan Shark app to calculate the actual costs of a particular credit line. The app allows you to compare payment terms, various interest rates, amortization tables and other loan scenarios. Use it to compare the initial costs, total payments and final costs of your credit accounts to help you fix that bad financial habit.
Stop Impulse Buying: One of the worst villains in the Bad Financial Habits Universe is impulse buying. Supermarkets and shopping malls have perfected the art of product placement and product movement so you can never easily find what you are looking for. Make a list of what you need and don’t verge from that list; ask yourself “do I really need that new video game when I’ve got three I’ve not yet played yet?” The answer is probably no with impulse buys.
Save Benjis App: : This app helps you shop in real-time with the necessary information to make you a smart shopper with just a few clicks. Enter the barcode of the particular product you “think” you want to buy (remember to ask if you really need it) and the app searches the Internet for better deals. If you find a better deal ,don’t purchase the item in the store – this helps you save money and stop those “I really need that RIGHT NOW!” impulse bad habits.
Make and Follow a Budget: This is one of those “duh” tips. Of course making and following a budget will help you climb out of your bad financial hole, but honestly who really does that? You need to or else you wouldn’t be reading this article. Save all your receipts and bills for two to three months, put them in a spreadsheet or the Xpenser app (see below) and figure out how much you spend every month and what you spend it on.
Make a budget that has room for movement and “extra” fun expenses like going to a movie, having dinner with friends or buying some new shoes – if you don’t leave room you will never follow the budget. Be realistic
Xpenser App: The Xpenser app lets you make a budget on your smart phone so you can access it anywhere. You can record expenses as you have them, rather than dealing with receipts and ultimately losing them or forgetting about them. The information in the app is exportable so you can do more calculations on Excel. It also tracks mileage, credit, banking information and works as a currency converter if you are travelling on a budget.
Invest and Save: A savings account is a wonderful idea. However transferring money from savings to checking takes less than 30 seconds if you use online banking – not a very secure way to keep your savings intact if you are one of those “bad financial habits” people. It is smart to have a savings account for emergencies, but investing will give you better returns and locks up your money so it’s harder to access when you see one of those “needs” at the mall.
Setup an investment account, such as an IRA, at your local credit union and transfer a specific amount of money into the account every month. Also reinvest all dividends and capital gains back into that account.
Daily Finance App: The Daily Finance App tracks more than 3000 financial news sources. It includes real-time stock quotes, charts and allows you to have multiple customizable portfolios listed at once. You can become a day trader with this app if you want to, or just track the various portfolio investments in your account. It is a useful app for any level investor, from market makers to market followers.