Managing money can be tricky. The ease with which one can now access financial products has its upsides and downsides. While on one hand, those who need funds can now access them easily, but on the other hand, it can also lead to indiscriminate spending which can land one in unnecessary debt. The excitement of festive season, too, can often exacerbate these habits. If you’re not careful with how you manage your money, these harmful money habits can destabilise you financially.

However, there are effective ways which can help you break the habit of being reckless with your money and instead, learn to utilise it smartly. Let’s look at some of these habits that many of us may be guilty of and how we can get past them to become financially stronger for the future.


Budgeting is a powerful tool that helps instil a disciplined approach to spending. Without a budget, the risk of overspending runs high. To avoid that, begin by tracking your income and expenses to create a monthly budget. This will help you identify areas where you need to cut back and prioritize your spending based on your financial goals.

For instance, you can allocate more money to for necessary expenses, debt repayments, and savings while limiting discretionary spending on non-essential items. A recently published workbook titled ‘The Prosperity Planner & Workbook’ may come in handy if you’re looking to assess your saving and budgeting skills. It can also serve as a guidebook to help you manage your overall finances.

Excessive debt

Indiscriminate credit consumption can lead to excessive debt. It is often accompanied by late payment penalties and high interest, both of which can trap you in a vicious cycle of debt, making you financially unstable and erode your wealth. The key to avoiding this is to understand how to use credit productively instead of destructively, and create a budget for your monthly spends. For instance, a home loan is a form of credit that helps you build an asset. But, overdue credit card bills are a form of destructive credit which lead to debt.

Not having an emergency fund

An emergency is a sudden, and often critical event that requires financial intervention. While you may dip into your savings to handle an emergency, doing so can deplete your savings and leave you unprepared for a future emergency. Instead, create an emergency fund which can help you during such unforeseen situations, without leaving you financially stressed. In the absence of an emergency fund, you may be forced to rely on credit cards, loans, or other high-interest credit avenues to cover unexpected costs, all of which can land you in deeper debt and cause greater financial damage in the long-run.

Not having insurance

Insurance serves as a safety net to protect you and your assets from unexpected financial losses. By avoiding insurance, you expose yourself and your loved ones to financial distress that may arise from unpredictable events like medical emergencies, accidents, or even death. Make sure to assess your family’s medical history and needs and get an adequate health cover that is at least 50% of more your annual income. This will help protect your finances in case of a health emergency that requires expensive hospitalisation. To protect your family’s financial future in your absence, get an adequate life insurance policy as well.

Not planning for retirement

Retirement is an inevitable stage of life that can be a joyful time with some financial planning. Planning for retirement is a long-term goal and the earlier you start at it, the better. Plan your finances in a way that they allow you to accommodate your retirement planning goal such as saving. If you have investments, review them regularly to align them with your goals. And most importantly, don’t ignore the power of compounding – the longer you stay invested, the better your chances at creating a significant retirement corpus.

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Using your credit card irresponsibly

Not paying your bills on time, making only minimum payments against your outstanding bill, or utilising your entire credit limit are some examples of irresponsible credit usage. These habits can not only damage your credit score, land you in debt, but also limit your access to credit in the future. A credit card is a useful tool that can not only help you make payments with ease, but when used smartly, it ca also help you save on routine expenses. But, the key to using these benefits is to pay your credit card bills in full, on time and staying within 30% of your total available credit limit.

It is never too late to take corrective steps, especially when it comes to managing your finances. Even a small step forward is a step in the right direction.

2023-11-16T07:38:22Z dg43tfdfdgfd