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Everyone is guilty of a bad habit, or two, but we definitely should be aware of which money habits are damaging our finances, from spending more than what you actually have to postpone payments of important bills. That’s what turns our alarms on. Because honestly, what is better than noticing financial improvement? That’s why we are sharing 6 of the most common bad money habits, and then offer tips on how to eliminate them:

1. Buy lunch, coffee, and snacks every day

If you live or work in a city (or in your daily commute you pass by five different areas), buying lunch outside can be irresistibly easy and problematic if your habit begins to absorb the money you would prefer to save for something else … like a vacation In the Caribbean. “There’s nothing wrong with buying lunches or occasional snacks,” says Stephany Kirkpatrick, director of financial planning “When you want to achieve greater financial goals, this is one of the easiest areas to reduce without sacrificing your quality of life.”

While the ideal habit would be to avoid last-minute purchases of food altogether, this is not always realistic. “If it’s too large a configuration to do it all at once, create a budget and decide in advance how much you are going to spend, and then challenge yourself to spend ₱30 less the following month,” Kirkpatrick recommends. “Make sure you allow yourself one day when you buy your lunch, and savor it, so bringing lunch the other days does not make you feel like you’re missing something.”

2. Skipping the search for the best value

Surely paying your bills on time is a good habit – but paying more than you owe or use is a very bad one. Examples to the case? Astronomical TV cable accounts for the 300 channels that you never have time to see.

“Things fit in three buckets,” explains Natalie Taylor,  MBA – Business Development and Performance

“Things you can control, things you can influence, and things you can’t influence or change”. The monthly bills fall into the second bucket, so use your influence wisely.

You can start by snooping on your provider’s website to see what kind of special offers you have. Once you know what you could pay for instead, call your provider to see if there is flexibility in your rate.

How much you can save: “Lowering your bills is a great way to allocate extra dollars to your goals without sacrificing your lifestyle,” explains Taylor. If you can negotiate only ₱100 of your monthly bills, you will save ₱1200 a year.

3. Do not prioritize high-interest debts

All debts are not equal. So, while you should always pay the minimum on your many debts – be it student loans, credit cards or a mortgage – there is a more productive strategy: Essentially rate your debt from higher to lower interest rate, and prioritize the payment of those with the highest interest rates first, allocating any extra money to that debt. Once it is paid, go down the list to the next highest interest debt.

“Focusing on paying one debt at a time (while keeping minimum payments on other debts) can not only save you interest but can also give you more flexibility in cash flow over time, explains Taylor. “To the extent that each debt is paid, you have one less payment to worry about each month. You can still decide to dedicate the same monthly amount to the reduction of general debt, but you now have more flexibility, which always feels good! ” How much you can save: If you have a credit card balance of ₱10,000 with 12% interest, you are paying ₱100 in monthly interest (this is quite low as interest rate). Luckily, Asteria’s interest rate is way lower than that.

4. Maintaining a debt on the credit card

While there is nothing wrong with the responsible use of a credit card, if you can not pay the full account on time, you will be penalized through interest, which only adds to your debt. “Getting out of credit card debt can be one of the most difficult financial challenges to achieve,” says Blaylock. “If you have several cards that carry debt, choose the one with the highest rate and attack that debt with every extra dollar you can find, while keeping minimum payments in the others.”



5. Leaving your saving goals for the end

Many of us have the habit of paying our bills and obligations first, and then relegating any remaining cash to savings, be it for an emergency fund, a marriage, a foot for a house or a trip abroad. What we probably forget is that saving should also be an obligation – to ourselves. If we do not prioritize it, it very often does not happen.

The fix here is a simple habit that only requires periodic action: “pay yourself first” by establishing a direct automatic contribution from your salary to your savings account, either through a direct deposit coordinated through your employer, or an automatic transfer from your checking account. You will not miss the money you do not see, and you might be tempted to adjust your budget to allow those savings. “Some initial adjustment may be needed,” says Brewer, “but you’ll feel great when you see that account grow every month with minimal effort.”

How much you can save: the best thing about paying yourself first is that the savings potential is practically unlimited. If, for example, you want to save ₱10,000 for a wedding within two years, you will have to set aside ₱417 per month. Then you will establish your automatic transfer for that base amount, and if you get an increase or your monthly costs go down and you adjust your budget, you can increase the savings amounts.

6. Setting savings goals and then forget them

It’s great that you’re contributing to your retirement and savings accounts – but it’s even better if you’re automating those contributions. In fact, you should not simply “establish and forget” your contributions. As your goals grow (and hopefully your salary) your savings should go up to accommodate those changes. “Growing improvements can have a huge impact on your future, without having a major impact on your budget today,” explains Farnham. Fortunately, this is another habit that can be automated: set a reminder on your calendar so that every six months you increase the contributions to your savings by 1% of your salary, at least. (Some retirement plans even allow you to automate this increase.) How much can you save? If a person who still has 37 years left to retire increases their contribution to their savings by only ₱500 per month, they could finally save another ₱105,000 (assuming a 7% annual growth rate) at the time of retirement.

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