It’s easy to get into debt, but hard to get out of it. Sometimes taking on debt is unavoidable. If you want to buy a house, you’re probably going to need to get a mortgage. Student loans are a part of life for many college students. However, there is also plenty of avoidable debt out there that far too many people get stuck paying. For Millennials who are just getting out on their own, there are several financial habits that are crucial in avoiding debt.
- Don’t Spend Money You Don’t Have
You probably hear this phrase all the time, but hearing it and living by it are two very different things. It’s tempting to spend money you shouldn’t be spending when it’s going on your credit card, as you assume that you’ll be able to pay it off later.
If you’re going to use a credit card, treat it like you’re spending cash. Don’t spend the money if you don’t have enough in your account to cover the purchase. If you’re having trouble with overspending, switch to paying with a debit card or cash.
- Save Money Every Month
Set up a budget to determine how much you make every month and track where you’re spending it. This is a great way to cut back on unnecessary expenses and to ensure that you’re saving money consistently. Don’t live paycheck to paycheck. Make it a priority to put money into your savings account every month. If you’re having trouble setting up your budget, you may want to look into financial planning services. What’s great about financial advisors is they can take a logical look at your financial situation, which is more difficult for you since you’re emotionally attached.
The reason why it’s so important to save money is so that you have a cushion for unexpected financial emergencies. If you get hit with a $1,000 car repair and you don’t have any money saved, you’ll be stuck taking on debt to handle it.
- Sleep on It
Thinking of buying something that you’re not sure if you really need? Give yourself 24 hours to think about it, no matter what kind of “today only” deals the salesman is offering. One of the main ways that people overspend is through impulse spending. They see a huge TV that is $300 off, or a jacket that they feel like they need to have, and there goes the money they were supposed to be saving. You’ll find that when you take a day to think about whether you really need something, you make far fewer unnecessary purchases.
- Pay Your Bills by Their Due Dates
Not only is paying your bills on or before their due dates good for your credit score, it also helps you avoid late fees that can add up and put you in debt. There’s no reason to miss a bill payment in this day and age. Almost every company accepts instant online payments, and you probably have at least two or three devices with a reminder function. You can even set up automatic payments for your bills, as long as you make sure you always keep enough money in your account to cover those payments.
- Set Financial Goals
Another reason people overspend is because they haven’t thought about their financial goals. If you don’t have a reason to save money, you’re far more likely to spend it. Think about what you’re working towards, whether that’s a trip to Europe, a house or a new car. You don’t want to spend all your savings on that goal, but having goals in mind helps you get into the right spending and saving habits.
When it comes to your financial future, the right habits make all the difference. Start following these habits immediately for long-lasting results.