For too long we’ve talked about financial health without considering that it’s not enough to have knowledge about money – it’s also necessary to put everything we learn into practice in order to establish a balanced and fulfilling relationship with our finances .
But this path is not as simple as it seems. If we look at some recent research, we will see that many people are in debt, overspending, or struggling to save and invest each month.
As a consequence of all this disorganization, we are increasingly stressed and worried about bills. Furthermore, many people are ill-prepared for financial emergencies and for retirement – which can end up being a huge problem later on.
All of this is a clear sign of poor financial health. But if we have access to so much information, why can’t we balance our accounts and establish a healthier relationship with money? The reason is simpler than it seems: we nurture bad financial habits that need to be changed. Otherwise, we can study dozens of books on finance and still not get anywhere.
Discover the worst financial habits a person can have and understand some ways to start changing them.
- Thinking only about the present
Achieving a healthy financial life requires short-term, medium-term, and especially long-term planning. Looking to the future and having plans and goals to achieve can even be an incentive to save. Living each day at a time can be an excellent way to approach life, but remember that tomorrow may come – and it’s good to be prepared.
- Immediacy and impulsiveness
The research also indicated that 33% of respondents never, or only sometimes, assess whether they really need a product before making a purchase, while 45% stated that they have difficulty resisting promotions.
Acting impulsively can lead to bad deals – even for those making an investment. Planning is the key to healthy finances . Otherwise, the risks of paying exorbitant prices, unnecessary fees, or regretting a purchase are high.
- Comfort and procrastination
It’s been a year since you last went to the gym or club, and yet the membership fee is still charged to your credit card every month. The same goes for that weekend course or that magazine whose issues are piling up on your nightstand.
The inertia in canceling unwanted services and subscriptions is a terrible habit for anyone’s financial health. Although tedious, spending a few minutes on a call center can prevent considerable and, above all, unwanted expenses. Don’t put off until tomorrow what you need to do today , especially when it costs you money.
- A tendency to compare oneself to others.
Constantly comparing yourself to others is the perfect trigger for feelings of frustration and unhappiness. The perception that your professional colleagues are more successful and happy than you can lead you to commit financial abuses in search of acceptance or to suppress a false sense of inadequacy.
Trying to maintain a lifestyle that isn’t financially sustainable is poison for any budget, and the only way out of this problem is to start looking more closely at your own circumstances and achievements. Valuing what you’ve built so far is more stimulating and productive for planning the future than feeding anxiety about what hasn’t yet been achieved and getting into debt to achieve success prematurely.
- Excessive use of credit cards
In the race to achieve dreams sooner, credit cards can be a great ally. Paying for purchases in endless installments might alleviate the burden of a single investment, but added together, credit card transactions can reach limits that exceed your total income , causing your accounts to go into the red.
Therefore, concentrating spending on credit cards, accumulating small, unnecessary purchases throughout the month, considerably increases the chances of a budget deficit .
- Not controlling your spending
Reducing credit card use, however, requires controlling spending. To do this, you need to carefully read your bank statement and credit card bill , write down your daily expenses, and keep in mind the value of your money.
Ultimately, is it worth paying 8 reais for an espresso when a kilo of coffee costs 10 reais at the supermarket? How many times a week do you treat yourself to an espresso, and what is its real impact on your budget?
According to Anbima, 71% of people who managed to save money in 2018 did so by cutting expenses .
- Delaying payments
One of the main symptoms of financial mismanagement is late payments. Although it may seem harmless to pay a bill or two a few days after the due date, the fines and interest generated by non-payment are unnecessary . In other words, it’s like throwing money away.
In contracts with higher values, such as rental agreements, these fines can represent hundreds of reais wasted that could have been saved. In utility bills, such as telephone and electricity, these charges usually appear in subsequent months, increasing your bills and draining your hard-earned money.
- Wait to save
If bills can’t wait, your personal income can’t wait either. According to Anbima, lack of money was cited as the reason by 63% of americans who said they didn’t save money in 2018, and among those who said they didn’t plan to invest in 2019, 56% cited financial conditions as the reason.
However, experts advise that it’s never too early to start . The market offers fixed-income investments with minimum investment amounts below R$100. Developing the habit of saving money is as important, or even more important, than making a good investment, and delaying this start is the first step towards sabotaging your financial health.
- Impatience
Once you’ve started making changes towards a healthier financial life, you need patience to see the first results. Acquiring a treasury bond or a private pension plan can yield good returns, but like any harvest, you have to wait for the right time .
Waiting for the maturity dates or the progressive income tax table helps increase your profitability over time. Redeeming them prematurely, on the other hand, can mean a significant delay in achieving your goals.
In daily life, it’s necessary to have focus and planning to keep everything in its place. Setting aside an emergency fund and different projects, each with its own budget, is a good way to prevent short-term plans from interfering with long-term goals .
For retirement, for example, private pension plans can be more advantageous than a government bond or a riskier fund. Understanding your goals and executing them in a coordinated manner is fundamental to not losing sight of any of them.