Mindful Money
Dec 18, 20193 min read

3 bad money habits and how to break them.

Penny Golightly portrait

by Penny Golightly

3 bad money habits and how to break them

Most of us struggle from time to time with bad money habits. It often stems from a lack of financial knowledge, skills or confidence, but it can also come from being stuck in an unhealthy rut with our behaviour or thought patterns. Here are three of the most common problems, and some useful ideas for making positive changes.

Keeping your head in the sand

We’ve all had moments where we simply didn’t want to think about our finances, especially when we’re extremely busy or stressed, but after a certain point it may become harmful and running away from our problems never solves them.

It can happen for many reasons. Some of us simply never get into the habit of checking our money situation, or we might have had family role models who never openly discussed finances. Maybe you’re swamped with work, or frozen with real or imagined fears about money troubles.

Knowledge is power, and if you haven’t looked at your finances for a while then it’s time to catch up and get an overview to put yourself back in charge. However bad a situation might be, once you know where you stand it’s far easier to troubleshoot and start to sort things out.

Once your problems are under control try setting a regular time for checking and monitoring your balances, and use automated alerts and payments to stay on top of the situation.

Impulse spending

That impulsive holiday booking, new pair of shoes or big night out seemed like a good idea at the time, but now you regret it. Short term mistakes can cause long term problems such as debt or failing to build up savings, whether it’s through big spending binges or constant small purchases.

Tackle it by looking at the situations and feelings that drive these behaviours. Does it happen more when you’re tired, after a few drinks, in a particular environment or with certain people? Are you feeling bored, down or lonely, or trying to compete with others?

Use an action-based strategy to break the chain, such as deleting credit card information held at favourite online retailers, unsubscribing from tempting shopping newsletters, or keeping busy with a new hobby instead of shopping all weekend. Seek help from your GP if you’re worried about low mood or compulsive behaviours.

Not setting goals

People who make plans are the ones most likely to achieve their financial goals, but it’s so easy to get caught up in everyday life and never plan ahead.

Sometimes this is because of general feelings of overload, but it can also stem from an uninspiring environment, or an excessive optimism that ‘everything will probably turn out okay even if I don’t make much effort’. Try showing some empathy towards your future self: how would you feel if you failed to achieve your most important goal?

A goal without a plan is just a wish, so try setting a small, specific goal first, and break it down into small, achievable steps. For example, if you want to save up £500, you could achieve this by making five monthly payments of £100 or ten monthly payments of £50. Enjoy the confidence boost from your success, then move on to bigger or more complex projects.

It also helps to read more widely about personal finance, join an inspirational community, set goals publicly or privately, use apps to track your progress, and reward yourself for reaching your targets.

It’s easy to slip into bad financial habits, but by examining, monitoring and challenging our attitudes and behaviours we can all change for the better.