Right from eating to working, we all strive to develop good habits in everything we do. Such habits can be either detrimental or beneficial for us. Similarly, we should also have positive financial habits. It is crucial to be financially literate and be well aware about your finances in order to create a lasting healthy and positive relationship with your finance. Here we have pointed out some of the major warning signs that you need to be aware of about your financial habits and start taking the necessary steps to change them.
Are You Unsure About How Much Money You Have In Your Bank Account?
A big warning sign about unhealthy financial habit is when you are not sure about how much money you exactly have in your bank account. This will probably mean that you do not have a proper budget and unaware about how much money is coming in and how much is going out. Without having a proper budget you are more likely to overspend. The amount of money that you spend should always be based on how much money you have in your bank account. Being unaware about that will leave you with hefty overdraft fees. The best way to deal with such habit is to keep an eye on your check book and track your spending. You should start checking your bank account balance on a regular basis and carefully go through your monthly bank statements in order to get a grip on where your money is going and how you can control them.
Do You Avoid Your Bills?
Avoiding your bill payments is a serious issue. Leaving your bills unpaid will not make them go away. You may end up in serious financial mess when you ignore your financial responsibilities. For instance, when you have missed your bill payment for months continuously, lenders and creditors can file a lawsuit against you in an attempt to recover the money they owe. If a judgment is put against you, the creditor can request for a garnishment of your pay check until the amount is repaid fully. To avoid this you should be updated about your bills always and pay them on time. You can also search for creditors willing to figure out a payment plan for you that suit your repayment ability so that you can continue making timely payments.
Do You Always Pay The Minimum On Your Credit Card?
You could be in serious financial issues when you continuously keep paying only the minimum amount on your credit cards. When you fail to pay your credit card balances in full the totals will add up to much more than what the original balance was. Do check your credit card statement to find out how long it will take you to pay down your debt by making only the minimum payment. You are likely to get surprised by the amount of time it will take you to repay back a loan when you only pay the minimum amount. Having multiple credit cards and making minimum payments can get you into serious financial trouble. So, try making full payments every month or stop using your credit card completely.
Do You Use Balance Transfers Too Often?
There are several benefits of balance transfer. It can help you gain low interest rate or 0% interest. However, there are some downsides as well. If you keep using balance transfer regularly you are likely to rack up even more debt. You should also consider balance transfer fees that will depend on the amount you are transferring. Balance transfers from one credit card to another will free up more credit which is likely to tempt you to use the card that might create more debt. Therefore, think carefully ahead of deciding to transfer balances and make sure it does not become a vicious cycle of growing debt.
It is important that you recognize the various warning signs of unhealthy financial habits. Understanding them will help you to make the necessary changes and handle your money properly.