If you’re tired of ridiculous overdraft fees, bad credit and a bank account that’s barely got enough for a can of soda, then it may be time to change the way that you handle money. Financial health can impact every area of your life. Money can’t solve all your problems, but it comes pretty close sometimes!

When you don’t curtail your bad spending habits, they can take over your life. This means being trapped in a cycle of poverty, unable to get mortgages or loans and being stuck paying inflated prices. Some people are fortunate enough to have assets and are able to consolidate debt with hard moneylenders online, but this doesn’t do much good if they keep spending irresponsibly.

It’s not enough to get out of debt; you also need to learn how to stay out of it. This means identifying and fixing your bad habits before you dig yourself deeper into debt.

Free Spending

Spending money like a millionaire with a McDonald’s budget is never a good idea. Free spending goes beyond impulse buys. It means spending every dollar in your bank account today to try and live above your means, without thinking twice about the rent that’s due tomorrow. Free spenders throw money around, max out credit cards and have that “you only live once” attitude. Sure, it’s a great philosophy when applied to things like taking opportunities and slowing down to enjoy life, but it just doesn’t work when it comes to cash.

This can be a hard habit to break. You can start by budgeting and trying to even out your bipolar bank account. If you have a steady paying job, your finances shouldn’t go from feast to famine erratically. Take control of your money, start a savings plan and consider taking advantage of online financial courses.

Using Savings for Wants Instead of Needs

Yes, you can live without that pair of $1,200 shoes! Far too many people confuse their wants with their needs and dip into their emergency savings account. It helps to define what a real emergency means to you. For most people this involves a major catastrophic event that impairs their ability to function. This can include things like:

  • Car failure
  • Immediate medical, dental, and optometry bills
  • Emergency home repairs
  • Legal fees

If a tree falls through your roof and your homeowner’s insurance doesn’t pay out immediately, it definitely constitutes an emergency. The same can be said for a major engine failure in your car or a visit to the emergency room. The key is to ask yourself if you’d be able to function without repairing, replacing or paying for something immediately. An expense that can fit into your regular budget doesn’t warrant draining your savings account.

Impulse Buys

Spending first and checking the bank later doesn’t always work out in your favor. Everyone indulges in impulse buys every once in a while, but if it’s cutting into your budget, it may be time to stop.

When many people think of impulse buys, they think of grabbing a candy bar or a magazine on the way to the checkout. This spending may fall in line with the “entertainment” section of your budget, meaning that it doesn’t hurt, but it does add up.

Larger impulse buys can threaten your financial health and put you in unnecessary debt. If you struggle with this, start tracking the money spent on every single impulse item. This can help you better understand just how much money you could save by skipping that chocolate bar once a week or saying no to another tool set that’ll just collect dust in the garage.

Neglecting to Balance the Bank

Many people have given up on the concept of the traditional check register and just follow their account using a mobile app. This can be a huge mistake if you’re neglecting to categorize and track your spending. Some banks have programs or apps that can help you start doing this. If that doesn’t work for you, there are plenty of independent programs that offer similar services.

It helps to see what you’re spending and where. Keeping your own records can also tell you exactly how much you have in the bank at all times. This eliminates the guesswork that comes with delayed payments and withdrawals that don’t show up immediately.

Lending Without a Contract

If you have a hard time telling friends and family “no” when they ask for a loan, then you could be setting yourself up for trouble. Nothing comes between you and the people you care about faster than money, and if they don’t pay you back, you may not have any recourse.

Believe it or not, drawing up a formal contract can help prevent conflict and keep relationships intact. It lays out an exact set of repayment specifications, due dates and agreements made by both parties. A contract creates a documented set of expectations and repercussions for late or missed payments. When a person understands the consequences and agrees to them ahead of time, they’re less likely to get angry when they occur.

Lending to people you care about can be messy and some people choose to avoid it altogether. Just be sure to protect yourself and avoid going bankrupt by paying for your cousin’s new car.

Spending on Unnecessary Services

Everyone has those days when it’s just easier to hit up the drive through instead of buying and cooking a meal. However, these little expenditures tend to cost more than just sucking it up and doing it yourself. When you pay for things that you could be doing for yourself, you’re paying for convenience.

This could be everything from meal delivery services to having your nails done. These services don’t provide anything of necessity and can easily be replaced with a little planning and forethought. There’s nothing wrong with pampering yourself on occasion and investing in self-care, but turning it into a lifestyle can be expensive.

Getting to know your spending habits and making some small changes can make a huge difference in your finances.