We are the sum of our actions and, therefore, our habits. That quote is attributed to the Greek philosopher Aristotle. It has stood the test of time because it is both profound and true. Nowhere does it show up more than in our finances. Your finances are the way they are because of the things you consistently do. This is true for the things you are doing right as well as the things you are doing wrong. Let’s look at 7 costly money habits many people get into it and understand how they impact your finances.

Getting used to being in debt

In Zimbabwe, debt is viewed negatively, so people are not as inclined to acquire debt. Then there’s also the matter of availability of consumer debt which further reduces the pool. However, it is a prevalent habit that has come up with many people who struggle with their finances. All debt is, of course, not created equal. Good debt builds your life, while bad debt sucks money with no discernable lasting benefit. However, times are tough and people are forced to borrow to make ends meet. This happens from time to time but once you find yourself in a continuous cycle of borrowing to make ends meet you have a problem. Learn about this problem here

Not paying yourself first

Accumulating wealth is about how much money you keep, not just how much you make. People can have high incomes but that will not always equate to being high net worth. Paying yourself first simply means treating the money you keep (savings and investment) as first priority rather than last priority when you budget AND spend. Trying to keep what is left after spending seldom works well, even with the most generous of incomes.

Not tracking your money

If you’re a regular reader, you’ll notice I always bring this matter up. I’m a fan of tracking everything you do but the reason I bring it up is that when I talk to people who are struggling with their finances, the common theme is that they do not really know where their money is going. Most people have a rough idea but when we do the math they really don’t know where their money goes and that is a problem. We will discuss later how your attitude towards money shapes this. The key here is once you get used to not tracking your money, how will you ever know how bad things are or how good they could be?

Expensive hobbies

Hobbies are a part of normal human life as we know it. We are all encouraged to have hobbies and I’m not going to stick my neck out and discourage you from your hobbies. However, we must be cognisant of how much our hobbies cost us. In line with the previous point about tracking your finances, it’s a good idea to know just how much your hobbies cost you. If you realised that your hobby is costing you money that could be invested into a lucrative asset or a comfortable retirement, you might want to find other ways to enjoy your favourite thing. And that’s what you should take away from this, do not abandon the hobby but perhaps look at the way you are going about it.

Not investing

Investing was mentioned when it comes to top the bad habit of not paying yourself first. Sometimes the distinction between saving and investing is a thin blurry line but in most cases investing refers to putting your money into an asset or product which will help it generate more money. Saving is not the enemy of investing; they are complementary. However, over time, saving does not allow you the opportunity to change your finances; it largely defers expenditure. While this is noble, it needs to be complimented with investing. Investing becomes a habit if you program it into your regular budget. Do this!

Not plugging leaks

I’m sure we have all come across the analogy of our finances being like a bucket full of holes. Taking money to be water, in this case, we know that adding more water to the bucket simply means it will leak faster and lose more water. The bad habits mentioned here and others are the holes and these must be plugged to give yourself the highest possible retention rate.

Negative attitude towards money

This is not so much a habit but it does manifest in habits. What do you say about money? What do you think about money? What happens when you get your hands on money? How do you behave when you don’t have money? These questions can help you identify your money habits and ultimately reveal your attitude towards money. Would you rather think about it because it causes some kind of pain? Perhaps you obsess over both accumulating and dispersing money? Your attitude will explain your choices and therefore habits with money.

Do you identify with any of the habits listed here? There are links to many of our past articles speaking on these very subjects and, of course, many more articles to come to help you manage your finances.