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Home / News / Business / 4 tips for getting a handle on bad financial habits

4 tips for getting a handle on bad financial habits

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Everyone has some bad financial habits even if they don’t want to admit they do. Even if you are
generally very responsible with money, there are probably places where you could improve. Below are
some of the most common mistakes people make related to their finances and ways that you can
address them.

Too Much Fear of Risk

At a glance, this seems as though it couldn’t possibly be a bad financial habit. How can being careful
about your money be a negative behavior? The problem is what happens if you do this over the long
term. If you put your money only in the safest of accounts, such as a standard savings account, over
time, its value may not keep up with inflation. If you are worried about losing money, there are still
conservative choices you can make that are likely to keep your investments safe in the long run.
Diversifying your investments is key. A financial planner can help you determine which types of
investments you would be comfortable with.

Overlooking Ways to Save Money

Another common error is assuming that certain expenses are fixed or failing to take advantage of some
creative ways to save money. By now, everyone has heard advice like to skip that fancy coffee every
morning, but there are other hidden costs that you could reduce. Take a look at your debts and how
much you are paying in interest. If you are paying off a student loan, you might be able to get lower
monthly payments with NaviRefi student loan refinancing. Similarly, if you are paying off a credit card
balance, don’t assume that you are stuck with the existing interest rate. You might be able to roll the
balance onto a card that offers zero interest for a certain period. Even if you can’t, try calling the
company and asking for a lower interest rate.

Creating an Overly Restrictive Budget

Many people hate budgets and can’t stick to them because they assume a budget has to be extremely
strict. While it defeats the purpose of a budget if you just spend money whenever you feel like it, there
should be room in it for fun things and indulgences. You should also make sure that you don’t forget to
include things that you may only spend money on a few times a year, such as gifts for friends. For some,
it might help to designate a small miscellaneous category for each month.

Having the Wrong Mindset

You can’t think your way out of debt or into wealth, but how you think about money and your
relationship to it can affect your financial success. If you say things to yourself like you’ll never get out of
debt or you’ll always be irresponsible with money, you’re not likely to change your ways. There’s
nothing magical about saying the right words, but you do need to recognize that managing your money
effectively is a skill like any other that can be learned. You may never be a natural, but you can definitely
improve.

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