Just like unhealthy habits can put your health at risk, repeatedly making bad money habits has severe consequences on your finance.

A bad habit is a consistent negative behavior that affects your quality of life and is difficult to correct. “It is hard but not impossible.”

Determining your bad money habits will help you avoid them and successfully overcome them.

Are you ready?

Here are five bad money habits you need to avoid to improve your finance.

1. Having a more expensive lifestyle than you can afford

We all have the right to comforts and luxuries. However, you need to exercise caution when it leads to a more expensive life than you can afford.
Financial discipline is represented by the simple fact of not spending what you do not have.

2. Not comparing the price-quality ratio

When it comes to comparing prices, people are usually lazy. Whether it is a product in a shopping centre or a service such as an internet or cable plan, we typically settle for the first option we see if it seems appropriate. However, we do not make much effort to compare with other stores that offer the same services. Even if we find the same service elsewhere at a better price, we are too lazy to change.
Some people continue to pay the same price year after year for a service that has not improved over time when the market has completely changed. Be careful with that!
It is always good to compare how you can have a better quality-price ratio of the products and services you consume regularly. (See also: 5 Things You Should Always Negotiate for a Better Deal).

3. Not preventing risks

Emergencies and unplanned expenses can take a heavy toll on your finances if you don’t have the proper protection in place. So, it is advisable to have an emergency fund in case of eventualities.
Another option to protect your assets is insurance. For example, insuring your car allows you to amortize heavy expenses in case of car accidents. Having this precaution will improve your quality of life and those around you. (See also: 5 Different Types of Insurance Everyone Needs).

4. Not giving importance to ant expenses

Another bad habit that we must avoid is not paying attention to those small expenses that may go unnoticed but are harmful. A clear example is buying coffee in the morning or those snacks at the store. If you do the math, it represents a considerable monthly expense.
To avoid this, keep track of these expenses and analyze which ones you can reduce or even eliminate. (See also: 5 Ways To Reduce Your Monthly Expenses And Improve Your Budget).

5. Spending all your monthly income

It is essential to know where your money is going in the form of categories, so you will see how you spend every penny. Therefore, it is advisable to have a monthly budget allocated by categories (food, housing, clothing, etc.) and then compare it with your actual expenses. Then, seeing each income and expense, you will be able to keep track of your expenses and avoid impulse spending.
You can also allocate a part of your income to savings and not run out of funds at the end of the month.

In conclusion

Overcoming bad money habits is a matter of effort, financial intelligence and perseverance. Financial intelligence is a concept that goes beyond intellectuality. It is about the ability to find new ways to generate money and optimize your monthly income.

There is no degree in financial intelligence. However, you will realize that you need to do something about your finances when:

• You tend to have unnecessary shopping habits
• Your family lacks essential items but has others that are not so important
• At the end of the month, you are totally in debt.

These situations are common in people with bad money habits. Therefore, it is necessary to act before it is too late.