Bad Financial Habits with Serious Long-term Implications

Working with money is largely about developing good habits and sticking to them. Many people don’t even realize that, but a large portion of the way you interact with your finances comes down to the habits you’ve developed and how well you can control them. Unfortunately, for many people, their ability to get on top of these things is actually not that good, even if they believe otherwise. If you’re not paying attention to how you’re acting with your money, it’s easy to fall into the trap of thinking that everything is fine, when it’s in fact far from that. Here are some examples of bad financial habits that have quite the strong potential to mess things up for you down the road.

Not Saving Enough

This is probably the biggest one out there by far. Failing to save enough money can have serious consequences at the worst possible time, and it’s not something you can correct on short notice either. Ideally, you should have enough saved up for about six months’ worth of expenses. That way, even if you find yourself without a job, you should be able to have something to keep you going until you’re back on your feet. This is a very simple backup plan that many people fail to bother with, only to find themselves facing significant issues when they need money urgently

Treating Loans as Free Money

Speaking of urgent money, bad credit loans are also something you need to be careful with. They’re a great tool, sure – but they also come with some strings attached that the average person doesn’t consider very carefully. A loan is not “free money” – you still have to pay it back, and you have to actually put a lot of thought into planning for that if you don’t want to face disaster. Make sure that you can keep up with the instalments, and if there’s any sign that you might have to delay a payment, get on top of that situation immediately. Talk to the creditor, let them know what’s going on, and make sure to recover as quickly as possible.

Buying Things Just Because They’re on Sale

Not every sale is your friend. In fact, unless you were actually looking for a specific item, buying it on sale usually means that you’re just wasting money. It’s true – and some people don’t even think about it in this way. That’s part of the reason why you see so many people “addicted” to shopping, always looking for the next best deal and trying to catch a nice discount on things they don’t really need. It gets worse when you consider that some people spend hours of their time driving around just to save cents on a purchase.

Gambling

Taking risks is inevitable when dealing with finances. But you have to make sure that yours are calculated. Gambling with your money – both in the literal and the figurative sense – is a very bad idea if you don’t know what risks you’re taking on, and what consequences you can expect from them. There are many ways to spend your money on things that promise great returns but don’t actually work that way, and the financial market can actually seem like a bit of a trap for the unprepared. And while that’s true, it’s also not that difficult to avoid those problems if you pay attention to what’s going on.

Not Keeping Track

Which brings us to another important point. You have to keep your finances in check, and track them as best as possible with any tools you have at your disposal. There are various advanced budget trackers that you can use to get a much better overview of your current situation than the one you have in your head. They don’t take a lot of time or effort to set up, and they can run pretty much on auto-pilot after that – you just have to input your information and let the tool work its magic. And the best part is, many of them are completely free!

Inflating Your Lifestyle Too Fast

Finding yourself with some extra income can be a nice feeling, but it can also be dangerous. Many people lack the capacity to be careful when improving their lifestyle, and end up spending more money than they’re actually earning, and not even realizing how things got that bad. This is particularly common among those that don’t keep track of their finances as we described above. The point is, whenever you find yourself earning more, you should take the time to evaluate how you could improve your lifestyle before actually committing to any such changes.

Because if you wait a little, you’ll often find out that things are not exactly as stable as they initially seemed. And it’s good to find that out before you’ve made any harsh changes to your lifestyle that incur even greater costs to you, rather than dealing with the consequences of that at a later stage.

Common Financial Scams and How to Avoid Them

Thieves are everywhere, and that’s an unfortunate truth that everyone has to accept in order to stay safe. When it comes to your money, you have to adopt a very defensive attitude if you want to keep things in check, and it can sometimes seem quite challenging to ensure that things are in order if you don’t have a good overview of how the financial market is structured, or what the common types of scams are. There are many of them to keep track of, and you will probably not be able to keep them all in check – but you can still do a lot to familiarize yourself with the most basic problems that you can come across.

Phishing

Phishing is perhaps the most common problem you’ll encounter in the wild. In fact, if you open your e-mail’s “Spam” folder, you’ll probably see lots of messages that have been identified as such. The basic idea is to get you to give up some of your information by fooling you into thinking that you’re entering it in a legitimate website. For example, you might receive an e-mail claiming to be from your bank, alerting you of a problem with your account. The message would have a link that you can follow to address the problem, but what you don’t realize is that you’re entering your credentials in a website owned and controlled by thieves. In the end, they get full access to your bank account, and you won’t even realize that anything had happened until it’s too late.

Investment E-mails

There’s a lot of opportunity to be realized in the investment market right now. Many thieves realize this, and they’ve made this a central point for some of their attacks. You may often receive e-mails with alluring investment proposals, some of which may even seem quite legitimate. Make no mistake though – unless you specifically requested these kinds of offers from someone, none of them are going to lead to anything productive for you. They will just leave you without a good chunk of your cash, and once again, you may not even figure out that anything wrong had gone down until it’s quite late.

Fake Tax Audit Calls

Some thieves will try to prey on a sense of urgency. A common trick is to call you pretending to be from the HMRC or a similar institution, telling you that you’re going to be audited for tax evasion, unless you pay a fine to prevent the audit from happening. There are multiple red flags in this scenario – the most obvious one being that tax authorities are never going to look the other way just because you’ve paid a “fine”. That’s the definition of a bribe! Plus, they’ll never contact you by phone to alert you of any issues with your accounts. You’ll always get a written letter explaining the issue in detail, and providing you with contact information for people who can assist you.

Preying on Urgency

This can be extended to many other types of attacks too. It’s a common trick that lies in the heart of many types of financial scams. Another common example is to tell you that you can get an attractive return on your investment if you put some money into a scheme, but you have very little time to make your decision. Usually, the time provided will be far too short to do any adequate research on the people who’ve contacted you, which is exactly their point in the first place.

It’s Not Always About Your Money

They say that information is the new currency of this age, and that’s not far from the truth. Your personal details can often be much more valuable than the contents of your bank account, because they can be used to obtain even more money in illegitimate ways. Have you taken out any loans recently? Many people use them to bridge gaps in their finances. But getting hit by a collections letter for a large sum of money that you’ve never borrowed in the first place can be a very nasty experience. And it’s exactly what can happen if you’re not careful about protecting your personal information.

Fake Cheques

You’d think that people will have wised up to the common scams around cheques these days, but that’s not quite the case. Even in countries where they’re not commonly used, you can typically find lots of people attempting these kinds of scams. It’s a common occurrence when buying something from a stranger online, for example. You’d get a cheque for significantly more money than you agreed upon, and the person will tell you that it’s a mistake, and to please wire them back the difference. The caveat is that the cheque is fake, which you’ll only find out in a few days/weeks once it bounces properly. By that time, the thief will have their money and will be nowhere to be found.