“If your habits don’t line up with your dream, you need to either change your habits or change your dream” John Maxwell
There are certain things that we may do unconsciously due to routine or because it has been engrained into our day to day processes. Over time, these processes become a habit and are normalised. It is important to understand your habits and how they impact your goals. In this blog I will look at 5 habits that can stop you from reaching your financial goals.
- Limiting beliefs
The beliefs you hold can be limiting if they stop you from seeing different options or opportunities, stop you from seeing your gift and make you feel as if you are not worthy of certain things. This can be embedded into your mindset. In order to achieve any of the financial goals you set, it is important to be aware of any limiting beliefs you may hold. Self-awareness will then help you to identify and eliminate limiting beliefs. Look at the financial decisions that you have made in the past and the reason behind those decisions. For example, thinking that it’s impossible to take control of your finances or that you cannot change your mindset can be a sign a limiting belief
There are simple steps that you can take to change your beliefs. First, you need to acquire more knowledge about finances to understand how you can develop yourself and improve your financial standing. This then demystifies the subject area and you begin to gain more confidence. There are several ways of gaining more financial knowledge which include reading, listening to audio books, attending courses or speaking to financial advisors.
For more about understanding your mindset read Why is it important to invest in yourself and understand your Mindset?
- Not having a budget
A budget is a plan of how you intend to spend your money. Having a budget in place helps to proactively manage your finances for example, if you prepare a budget and notice that you have more expenses than income, you can either proactively reduce your expenses or look at ways to generate more income. Spending money without a plan, makes it difficult to keep on track with your goals or to spot any money leakages. Having a budget helps you to track your expenses and to understand your spending habits. It is important to have some sort of a plan in place that works for you. This can either be pen and paper, spreadsheets or budget applications. The fundamental point is being able to effectively plan for how much income and expenses you have.
Read How to create a simple and effective budget for more tips on how to create an effective Budget!
- Being too scared to invest
Saving is an integral part of good financial management; however, it is important to take the next step which is investing. Investing is putting your money into financial schemes, shares, property etc with the view to gain a return (profit). This is a way of growing your money however, it is important to understand the risks associated with investing. To reduce the fear of investing, it is important to equip yourself with knowledge regarding the type of investment you are interested in. When starting out, start small and use reputable platforms which are appropriately regulated. Once you have the confidence you can then begin to venture into more sophisticated investment schemes. Always do your due diligence before investing.
- Relying heavily on debt for day to day expenses
Short term debt can be very expensive and relying on it for day to day expenses can be an indication that your cash flows should be reviewed. Reviewing your income and expenses will give you a clearer picture on whether or not you can afford your current lifestyle. It is important to have a budget in place and to live within your means. If you find that you have short-term debt balances, which you will not be able to pay back in a short period of time, it is advisable to speak to a personal banker and find out which other options with are available to you.
- Relying on one source of income
Having one source of income can limit you if you are not fully utilising your resources. Depending on how much you earn, it can take longer to save for your goals. If something unexpectedly happens, this may cause you to use up your savings and go into debt. Passive sources of income are tools that you can utilise to increase your sources of income without having to actively work. This means that you do the work initially to raise the money, do the research etc but you do not have to actively work to receive a return. You can also monetise a hobby or gift that you have to increase your sources of income. You can invest into business ventures for a return.