Ditch These Money Habits Now to Give Your Life a New Direction Mid-Year

Bad money habits can create massive harm, frustration, and stress in your life. Think of the high interest you pay on loans, leaving you with nothing for emergencies. Perhaps you have an inclination for uncontrolled spending or living paycheck to paycheck.

Or, you are overburdened due to poor income generation choices that are more of a money pit. It is time to take a reality check and turn the tide. By mid-year, you can reflect, digging deep into your circumstances to rid behaviors that derail you from financial success.

 Here are some of the worst money habits to drop in a new direction in the year’s second half.

1. Racking up Mobile and Payday Loans to Pay Your Bills

If anything is affecting the majority of Kenyans right now, it is the high living costs. Most are turning to mobile and payday loans to help settle household bills. But while these loans can look like a quick and easy fix, they can eventually worsen your financial situation. 

You might argue that they are fast and convenient. But that is why so many people are trapped in that massive debt cycle.

Mobile and payday loans are legal and regulated by the central bank of Kenya and could appear to be a timely lifeline if you are low or late on rent. However, here is why you should drop them now.

• The loans are expensive and are attached to high-interest rates. For example, the lowest you will cough out is Ksh1000 for every Ksh10,000 after 30 days. Some lenders, though, charge much higher interest.
• Depending on your money lender, you will be charged an extra percentage for missing a payment. 
• It is easy for your debts to spiral, especially when you’re not entirely sure if you will be able to settle this loan within the next 30 days.
• Mobile and payday loans are why many Kenyans are languishing under the CRB burden. And once you have been listed on this bureau, your credit history is in tatters, such that you cannot borrow from any credible lending institution.
• The loans are easily accessible. While this may sound like an advantage, the drawback is that it is easy to borrow without an afterthought. It means you access the money without a proper plan on how to use and repay.
• Freedom from the shackles of mobile lenders can help you find cheaper and friendlier personal and business loans elsewhere. 

Read Also: Stuck in a Debt Cycle? Here are 6 Tips to Help You Break Away!

2. The Temptation for Impulse Buying 

A leading reason most people fail to achieve their financial goals is shopping on impulse without a prior plan. But why do people cave into unplanned purchases?

It is because it is fun and exciting and gives you an adrenaline rush. That enticing grab of a new handbag or baseball cap might not seem like a big deal.

Again, most people also buy, thinking they have a deal or a good sale. They fail to realize that advertisers trap them in unending marketing gimmicks. Here's how to stop shopping on impulse.

• Create a budget and stick to it. With such a plan, you track all your monthly expenditures expenses.
• Create a separate fun money account for fun spending. Then, you can shop guilt-free for anything that catches your eye anytime you walk in a mall or supermarket. It is like a reward /treat that discourages impulse buying.
• Keep off those 24-hour deals. The instant offers often play on the shoppers’ psyche, who will rush not to miss a deal. In hindsight, they encourage people to shop thoughtlessly.
• Bring only the cash you need for shopping. Figure out what you need before you go to the mall. A list of items and an estimated amount for each may prevent you from overspending or impulse shopping.
• Keep tabs on your financial goals. Buying without a plan eats into most people's annual/mid-year financial goals. So, whenever you shop, keep in mind your plan to get out of debt, pay for your mortgage, or save towards your emergency fund. 

Read Also: 10 Tricks to Stop Impulse Spending in 2022

3. Eating Out and Ordering Via Delivery Services Instead of Saving on Your Food Budget

 How Kenyans eat keeps changing daily. And even though food prices have been abnormally high recently, many people can't resist the allure of eating out. To make things worse, you can now conveniently order any type of meal through numerous quick interface delivery apps.

Each trip to a restaurant or food takeout results in more spending than you would have cooked your food at home. Hotel food, even when blunt, carries additional charges that you would have avoided if you had made more nutritious and value-driven food in your home.

Okay, many reasons make people want to dine out - socializing, networking, celebrating, and maybe taking a break from their busy and boring lives. However, assuming you are dining out for convenience's sake. You would be better off saving some serious money by eating at home.

Read Also: Tips For Living on a Tight Budget Like a Pro

4. Living Beyond Your Means

Living beyond your means implies spending more money than you can afford. Telltale signs you are spending beyond what you can afford to include those escalating house bills or borrowing

for emergencies. Perhaps you have a penchant for driving those expensive cars you can barely afford. A simple guide is:

• Stop recycling your mobile loans
• Resist the ever-present pressure to have the same lifestyle as people you know
• Save up for any purchases
• Begin to build an emergency fund, however small and humble

5. Pleasing Friends and Relatives and Failing to Plan Well for Black Tax  

What do you do when your friends and relatives become your financial business? You might feel overburdened and fail to meet your financial goals. While you can't live in a vacuum, your resolve to be a money-sounding board for your clan is disadvantageous. For example;

• Unbudgeted family support affects your money-saving abilities. 
• Paying black taxes affects your investment abilities.
• It becomes challenging to build generational wealth.
• Mental health is for those praised as solid and hardworking. Yet you could be tired, sick, and unable to meet your financial goals because of others' money demands. 

Here is how to stop it now for a new direction in your life.

• Steer clear of the cycle of dependency. You can create an initial 3 to 6 months emergency fund to sustain you in case of job loss or other uncertainty. 
• Create a solid monthly budget, ensuring you set aside funds for debt settlement and expenses.
• Determine who your primary responsibility is. Everyone else is secondary, and you have no obligation to help.
• Budget well for black taxes. Create a budget detailing who needs your financial help the most and how much you can raise.

Read Also: How Black Tax Impacts You Financially

6. No Savings for Emergencies 

Emergency expenses can creep in when you least expect them. It could be a broken sink, a sick child, or running out of gas at the odd hour. Without an emergency fund, you are a cooked goose. How do you break the lack of this critical savings account?

• Start to build an account for emergencies immediately. Keep it separate from your other savings accounts so as not to dip into it.
• Let the standard sum equal 3 to 6 months' worth of living expenses.
• Begin humbly with what you can afford, and gradually build it.
• Form emergency savings as a lifetime habit, saving a standard amount of money weekly or monthly towards the kitty. 

Read Also: Six Simple Ways to Jumpstart Your Emergency Fund.

7. Feeding Addictions (Such as Smoking, Drinking, and Non-Experiential Leisure) 

Addictions of any kind can be expensive to maintain. Gambling, alcohol, and drugs can drain your resources, compromising your financial goals. How do you ditch your addiction? Here is your guide: 

• Avoid temptations and peer pressure to indulge 
• Seek mental therapy for your addiction 
• Set a quit date and stick to it 
• Change your environment 

8. Waiting Until You 'Have More Money' to Invest

Most people are hesitant to save or invest until they have tons of money. Sadly, time will never be on your side. Your capital may also be elusive. Start with the little you have now. You can habitually stash a little each month for emergencies or future purchases. Once you come into a windfall or even a bonus, you can reevaluate how much to spend, invest or save.

9. Dipping into Your Savings  

Suppose you have set up your emergency or retirement savings fund. Keep a safe distance from it, and avoid the temptation to withdraw. Interfering with your most critical savings equals putting your financial future at risk. You might never grow as it is intended.

Keep your hands off the kitty unless there is an unavoidable situation/ catastrophe. The trick would be to move such a fund into a high-interest savings account. You can also opt for money market funds that grow your money due to the high-interest rates.

Wrapping Up

Who said dropping those terrible money decisions and habits is easy? At the best of times, it can be tricky to adjust. But it's the only and real way if you crave financial freedom. Get started today to see how fast your money situation changes by the year's close.