Our spending habits and money habits are formed from a very early age. And due to the importance of money in our lives, it can be more challenging to change or reestablish good spending and money habits. To change your spending habits and increase your income to debt ratio, start by eliminating these negative spending habits.
Spending more money than you make. This has to be the top detrimental spending habit. There is absolutely no way that spending more than you make won’t land you in extreme debt if allowed for too long. While it may seem obvious to spend less than you make, it is relatively easy to do so, especially with the invention of credit cards and cash advances, or simply by borrowing money from family and friends.
While these options may be something to remember as a backup plan, overspending each month digs a hole in your finances for the following month. When you make $900, but spend $1000, you have to take an extra $100 from your new paycheck to pay off debt from last month, possibly with designated for bill money. Thus a cycle begins.
Spending without a plan. It’s as simple as going grocery shopping. When you make a list of what you need and stick to it, you are 9 out of 10 times more likely only to spend what you planned for. Without a list, shoppers guess as to what they need and are tempted to take anything that looks good. (Additional tip- when grocery shopping, eat before. You will be amazed at the difference in your reasoning.)
Paying for convenience. Things, like delivery food, makes life easier when it comes to sitting at home watching television. However, it doesn’t make things like balancing your checkbook or creating better spending habits easier. Avoid the delivery fee and pick it up. Better yet, plan out your meals for the week to help you budget food and money.
Not tracking spending. You NEED to balance your checkbook. You NEED to recognize how and where you spend your money. This is an essential step in managing your finances.
Using Debt to pay off debt. A prime example of this is using a credit card to pay bills. While it feels nice to get that bill out of the way and taken care of, you have not managed any debt. Instead, you have shifted your debt. While this could pay off if high-interest rates are involved, most times when debt is shifted, you can end up worse than when you started.
David S. Chang is an entrepreneur, wealth manager, keynote speaker, consultant and Chairman/CEO of Chang Holding Company. David is also the editor of The Art of Thinking Smart, a blog and finance column in The Star-Advertiser’s weekly Midweek with a readership of over 400,000 people. He is also proud to serve as an Intelligence Officer in the Hawaii Army National Guard.
A longtime expert in finance, David uses his executive roles in various companies under Chang Holding Company in order to help people achieve their personal financial and business goals throughout all phases of their lives:
A wealth management firm (which has become ranked as one of the top in the nation and featured in Forbes)
WealthBridge Private Equity
A private equity and venture capital fund
Care for Life
A private-duty home and senior care company
Other companies under Chang Holding include GreenTech Pacific LLC and Pacific West Import/Export Hawaii.
David S. Chang is the founder of The Art of Thinking SMART, The Art of SMART Money, and The Art of SMART Stocks. He created the Simple 4-Step System to Wealth and Financial Freedom. Supported by over a decade of research and driven by David’s desire to help others excel in all areas of their lives, this step-by-step online training program enables people to take control of their wealth immediately.
Everyone should have a financial plan, regardless of age, income or net worth.David S. Chang
David has always loved to learn and seek out opportunities to achieve the American Dream– so it comes as no surprise that he has taken numerous continuing education courses in finance, investments, and insurance. He also completed the Chartered Financial Consultant® (ChFC®) program at The American College.
In 2015 David was chosen as a member of InvestmentNews’ 2015 40 Under 40 list of top young advisers and associated professionals in the financial planning industry. He has been featured in Forbes as one of America’s Select Financial Leaders. In 2013, David S. Chang was selected as 40 Under 40 Military by CivilianJobs.com, 2011 Pacific Edge Young Professional of the Year, 2010 Business Leader of the Year from the Pacific Business News Forty Under 40 and 2011 finalist for The Business Leadership American Savings Bank Business Leader of the Year.
In addition, WealthBridge Inc. was selected as a FIVE-STAR Wealth Manager for the State of Hawaii in 2014 through 2011, representing the top 2% of Wealth Managers statewide. In 2014 through 2012 WealthBridge Inc. was also selected by The National Association of Board Certified Advisory Practices (NABCAP) as a Premier Adviser.