8 Signs It's Time To Change Your Financial Habits

We all makes money mistakes from time to time. The most financially successful people learn from these mistakes and are careful not to repeat them. Unfortunately, it's also easy to fall into a trap of repeating mistakes and allowing them to become bad habits. If you’ve been struggling financially or feel like you’re not reaching your goals, you may need to change your financial habits. Here’s how you can tell.

1. You don’t know how much you spend each month.

You don’t have to know off the top of your head the amount you spend down to the penny – although you should be able to access that information if needed – but you should have a ballpark figure in mind. Tracking your spending is one of the best ways to keep your finances under control.

2. You’re often late on bills.

Paying late is a terrible habit that can cost hundreds of dollars in late fees, reconnect fees, and interest. Not only that, late payments can wreck your credit score making it difficult to get approved for favorable terms on new credit cards and loans.

3. You frequently overdraft your bank account.

While you should aim to never overdraft your bank account, an occasional overdraft may not necessarily be a bad sign. However, several overdrafts in a short period of time is a sign that you need to change the way you spend. Take advantage of technology that makes it easy to check your bank account balance realtime and practice self-discipline so you don't spend when your balance is low.

4. You don’t save.

Each month you should contribute to at least two savings goals: a “rainy day” emergency fund and retirement savings. Working towards these two goals puts you in a better place financially and can prevent other financial disasters.

5. You pay the minimum on your credit cards.

Paying the minimum is comfortable and convenient. You can rack up a big credit card balance and only have to pay a small amount of it each month. The minimum payment is also expensive and keeps you in credit card debt for years. If you’re paying the minimum because you can’t afford to pay more, that’s an obvious sign you need to change your financial habits.

6. You haven’t checked your credit in the last 12 months.

If you’re not checking your credit score and report, you’re not taking an active role in ensuring your credit is the best it can be. While you may not need your credit score often, when you do need it, you’ll need it to be in the best shape possible. Since it takes time to build a good credit score and the right financial habits to maintain it, you should monitor your credit often – as often as monthly. That way you always know where you stand and what to improve.

7. You have to borrow money often.

Habitually borrowing money is a sign that you’re not managing your money well. It’s worse if you have to resort to short-term payday loans. Borrowing money works temporarily, but when it's time to repay what you’ve borrowed, it reignites the strain on your finances. It may take a significant change to your spending habit to reach a point that you no longer have to borrow money.

8. Your credit cards are always maxed out.

Paying your credit card bills in full each month is the best way to stay out of debt. If your credit cards are maxed out and you can’t pay them off right away, it’s a sign that you may not be in a great place financially.

The good news is that it’s never too late to turn your finances around. Breaking bad habits can be difficult at first, but if you’re seriously about managing your money better, you can make it happen.