Tell me some bad habits with money, which keep people poor?

Humans have many types of habits; Some are good, some are bad. Bad habits related to money are so ingrained in some people that they are unable to break them. If you want to be financially independent, you need to get rid of the following 8 bad habits related to money.

One. Pay yourself last

As we all know, you should pay yourself first. But here I am saying, those who end up paying themselves are wrong. There are some people who save some money if they have some money after spending a whole month. This is a big bad habit. If you want to be financially independent; If you don’t want to run out of cash, you have to ‘pay your self first’. That means you have to pay yourself first. Whether it is 10 percent or 20 percent of your income; As you age, you will save a portion earlier. Spend the remaining money after that.

Two. Being in a very comfortable position with bad debt

There are two types of loans. One is good debt, another is bad debt. A loan that can earn you more money is a good loan. Suppose you start a business or buy something with some money. After a month, if you sell it at 10 percent or 20 percent higher price, your capital is created. If you still have some cash after paying the interest on the loan, then the loan is a good loan. Bad debt, on the other hand, is the debt that you are spending on and from which you are not getting any income but rather money is going out of the income to pay off the debt. The biggest bad debt is your credit card. In which 22 to 40 percent has to be paid with interest. When you’re too comfortable with bad debt, you’re no longer on the road to wealth. So you have to get out of this habit.

Three. Not having any emergency money or emergency fund

What you do is, keep aside the money that you need to meet your daily needs for three months to six months or a year. You keep the money. No need to spend this money. Spend this money only when you are in great danger. Suppose you are out of a job or have become so ill that you cannot return to earning an income. What do you do at this time? Break the money of that emergency fund. Many people are breaking the emergency fund just because the price of a few things has increased. It can’t be done. Then you adjust the costs. The next time you return to work, build an emergency fund first. Those who don’t have this emergency fund, they are totally damaged at some point in their life.

Four. Not having account of own income and expenditure

Are you so busy that you don’t know how much your income and expenses are? You might say, you know your income. Because you are earning from one source, although some earn from two or three sources.

When you know income but don’t know expenses, it’s scary. If your income is 50 thousand taka; Need to know how much money is being spent. If you pay yourself first and keep 10 or 20 percent aside, then you can spend the rest. Those who don’t know their income and expenses properly, especially how much money is going to certain sectors, they gradually fall into crisis. It is important to know for two reasons. One is cost reduction; Second, after evaluating the expenses in the next month to understand, how much you have spent in any sector.

Five. Having a very expensive hobby

Many have expensive hobbies. For example, someone goes out of Dhaka more than once a month; Some people go outing with the whole family once a week. Others prefer to fly one day a month. Those who have multiple such expensive hobbies leave a lot of money out of pocket every month. I say, you will spend of course, but knowingly. That cost should not be capricious. To avoid this, you are unknowingly buying a lot of things, which you do not have any special use for. Your income is very limited. You have to live with this limited income; Some have to be saved and some have to be invested. You have to learn to think of alternatives.

Six. Just focus on savings

There are some people who are just saving, they are saving oriented. Suppose, the money that comes in, and what is left over after spending, is kept in the bank or saved in various ways. It is a poor money habit. Because once the savings are yours, it needs to be converted into investments. For that you need knowledge, wisdom. It is necessary to know where, how and when to invest. After saving the emergency fund you should invest in different small sectors. If invested and done efficiently, the returns you will get from it will never come from savings. Those who focus only on savings, do not understand this. As a result they cannot be financially independent. That money does not grow at a high rate. So those who live only in savings, this habit is called ‘Poor Money Habit’. This habit of those who go to investment is ‘Rich Money Habit’.

Seven. Waiting for investment for too long

It is not that those who save, do not think of investing. They take so long to think, then it’s too late and they miss out on opportunities. The sooner one gets into the investment process, the better. But investment cannot be done by listening to others. You have to improve your skills; You must have financial literacy.

Eight. Not being careful about personal finance

There are some people who live in eccentricity. Don’t be careless about your own financial management. Work on own financial management habits. It takes a long time to learn. They are not taught in schools and colleges. You have to use the knowledge gained in this regard to increase your wealth. Own financial management if you do it right; Wealth will increase. I do not say – increase wealth by stealing or embezzling from others. I say, manage the money you earn throughout your life properly. Do it yourself and help others if you can.

Saiful Hossain: Economic Analyst, Finance and Business Strategist; YouTuber and CEO, Finpower Leadership International