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How to break bad money habits... NOW!

Habits can be easy to form, but difficult to break, particularly when it comes to how we spend our money. We oftentimes make financial decisions without giving them much consideration before or afterwards. So, how do you cease negative financial behaviour? It takes time, commitment and a desire to make the change. For many of us, making smart monetary decisions is a process of trial and error. Poor practices aren't corrected overnight. Start slowly, keep it simple and you’ll begin to see results as rules become routines. So, let’s look at some fundamentally poor financial habits and, more importantly, how you can break them. Not setting goals? Establish periodic, short-term objectives that help you develop and stick to strong new habits as well as keep you motivated to reach those long-term milestones. Not budgeting? The aim of a budget isn’t to dampen your lifestyle, but to gain perspective and understanding of your spending patterns. Think of it as a “spending plan” - know where your money is going and how much you can use. It’ll help you identify areas of improvement, no matter your age or income. Not paying bills on time? To avoid late fees, schedule calendar reminders for yourself through your email or smartphone. Better yet,consider setting up so that bills are paid automatically from your bank account (see next point). Not making good financial habits “automatic”? Automation makes good financial practices simple, so you hardly have to think about them. For example, with all your regular bills and savings, you can automate their payments via direct deposit online and/or your paymaster. Accumulating credit card debt? Credit cards can be really convenient but credit card debt can be a real setback. With high interest rates, you end up paying more than the original purchase price, plus it can take years to pay off the debt. Ideally, pay off your credit card balance in full each month. Not prioritising high-interest debt? Rank your debt in order of highest to lowest interest rates, paying off the one with the highest interest rate first by devoting any extra cash toward it. Once that’s done, move down the list to pay the next high-interest debt. Only making minimum repayments? Contributing only the minimum repayment on your credit card — or any debt, for that matter — means taking longer to pay off the balance owing, therefore you pay more in interest. Where possible, make additional repayments to accelerate settlement of any loans. Not saving? Quite simply, saving money should be compulsory — it must be part of your monthly bill cycle. The first “bill” you pay should be to yourself: set up an automatic transfer straight from your pay into a separate high-interest savings account, either through a direct deposit via your employer. Setting and forgetting your savings? As your goals (and hopefully your income, too) get bigger, ramp up your savings to accommodate them. Gradual increases can have a positive effect on your future, without having a negative effect on your budget at present. And finally, don’t forget to give yourself a small amount of money for your favourite activities (whatever the heck you want to spend it on!). That way, you’re being smart, keeping a good balance on investing in your future, and still having fun.