Some bad habits affect our physical health, such as smoking, biting our nails or too much junk food. But others affect our financial health.
How do you know if you have unhealthy financial habits and what you can do to build the best? Take these three steps.
1. DIG IN YOUR RELATIONSHIP WITH MONEY
The relationship with money is complicated. It is not always easy to identify financially unhealthy behaviors. But there are some signs you can look for. Common problem areas include spending more money than you earn, neglecting to set up an emergency fund and not postponing retirement.
Taking a financial health quiz can be a good first step towards identifying weaknesses. However, our struggles do not always reflect bad habits or decision making. Many experts say it is important to consider the role that systemic problems can play in shaping financial health.
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“Inability to get a living wage, lack of health insurance, student loans in a career that you can’t find a job. The fact is that in this country there is nowhere for someone who lives on the minimum wage, to rent a two-bedroom apartment. These are all systemic problems, ”said Sandra Davis, founder of Sage Financial Solutions, a San Francisco Bay Area-based organization focused on providing financial services to low-income communities.
If you are dealing with such system problems, focus on finding support. United Way’s 211 service can link you to resources if you find it difficult to pay bills or afford basic needs.
On the other hand, if your income should be enough to cover your expenses but not, then you should look at your behavior, Davis says. What choices do you make regularly and what do you have control over?
Look for samples. You may be shopping online if you are bored or upset. Or you ignore your debt because it is overwhelming. You may be inclined to spend extra income instead of using the money intentionally because your family did not emphasize the importance of saving.
Emotions and experiences can have a profound effect on our money habits. This is why you can also develop bad habits if you are in good financial shape. For example, a person who pays all bills on time and has a lot of savings may still feel anxious about spending or arguing with a partner about money.
“There’s often an unresolved history of financial deficits and losses that leads to them not being able to fully relate to the fact that they’re actually financially secure,” says Ed Coombs, a certified financial planner and financial therapist. in Charlotte, North Carolina.
Once you better understand what is behind your bad habits, you can start correcting them.
Ask yourself, “Where are you trying to go? And where are you now? And then how to bridge this gap? ” Davis says.
Setting financial goals can put you on the path to healthier habits. Your goals can revolve around certain amounts in dollars, such as getting rid of debt or saving on spending three months in an emergency fund, Davis says. Or the goal may be to change your money thinking, such as becoming more mindful of your spending or more comfortable discussing money with others.
Create a plan that supports your vision of financial health. Let’s say you want to increase your emergency savings or pay your credit cards on time. Automating these transactions can help. You can transfer a certain amount from your current account to your savings account each month or set up minimum credit card payments through your issuer’s website.
Combs offers to check your finances once a month or every couple of months. Review your budget and behavior to determine if you are on track to achieve your goals.
Giving up financial habits can be a daunting task. But you don’t have to do it yourself. There are people and activities you can turn to, “whether it’s keeping a diary, talking to a partner, or some other way to help yourself feel safe again on the subject of money,” says Combs.
There are also many experts who can give recommendations. A financial therapist, for example, can help you sort out your financial relationship.
“We all have a history of money. And if your money history has a lot of emotional pain and chaos related to money, then often these problems in your past need to be treated just like any other type of trauma, ”says Combs.
You can also work with a financial planner or get a free consultation on managing your budget, credit or debt from a nonprofit credit counseling agency.
On the way to improving your financial habits, learn to stand up for yourself, Davis says. “It can reduce or eliminate embarrassment to get help wherever you may need it. If it means community benefits, if it means family and friends, whatever that means to you, ”she says.
This column was provided by The Associated Press on the NerdWallet personal finance website. Lauren Schwan is a writer at NerdWallet. Email: email@example.com. Twitter: @lauren_schwahn.
NerdWallet: Your financial health indicator https://bit.ly/nerdwallet-financial-health-calculator
211: Find the necessary community resources https://www.211.org/
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