A big part of good personal finance management is the ability to develop good habits. In the following, we will present you with the pitfalls to watch out for in order not to harm your efforts.

Spending without a budget.

This is one of the biggest and most common mistakes.

Whether you want to build savings to stop relying on your paycheck cycles, or to prepare for a major purchase, knowing how much you can spend and how much you are spending is essential to achieving your financial goals. That’s why it’s so important to have a budget, which will serve as your blueprint.

Making a budget may seem daunting, but it doesn’t have to be a hindrance. Many people start out trying to plan everything but give up very quickly afterward. The right approach is to take it one step at a time, trying to focus on establishing a habit of regular monitoring and review.

If you are new to budgeting, you can start by creating a simple Excel sheet listing all your income and expenses. You can also use our budgeting method in Fineo, which will guide you through all the steps: defining categories, allocating your resources, and tracking expenses.

Buy now and pay later:

While surfing the Internet, you’ve probably noticed that more and more online shopping sites are offering the option to pay for your items in several small installments, or even to defer those installments for several months. This type of purchase can be very tempting, as the amounts to be paid back are small compared to a one-time payment. However, it could have negative consequences for your finances.

First of all, this option will give you the false impression that your purchasing power is greater. This will encourage you to make unnecessary purchases. Also, by using this option excessively, you could become over-indebted, while incurring fees if you miss payments.

The solution would be to simply never buy in installments unless it is a major purchase for you and you can’t pay it off in one go.

You should also try, as much as possible, to postpone the purchase decision for several days. This will give you time to think things through and avoid impulse buying.

Shopping without a list:

Have you realized after a trip to the supermarket that your basket is full when you had come for two or three purchases in mind? This type of spending could be a major blow to your finances, especially since shopping can consume a very large part of your monthly budget.

The organization of a supermarket is made in such a way as to push us to spend a maximum. To buy bread or other essential products, you have to go around the store, passing through a lot of departments with promotions encouraging you to buy more products in larger quantities.

Therefore, to stay rational in your shopping expenses, it is important to plan what you need. Creating a shopping list that you can share with your household and update regularly is a good place to start.

Once at the supermarket, try to stick to your list. You may find that once you get there, you realize that you forgot to add some items to your list. However, always try to keep this gap to a minimum. You can also set a spending limit for yourself, with a small margin.

Not saving every month:

Getting into the habit of saving can be difficult, especially with all the spending opportunities around us. That’s why it’s important to think of saving as a habit to get into, rather than a goal to achieve.

Not enough money left in your monthly budget? That’s not a problem: if you put aside just a few dollars each month regularly, you can have a pretty consistent fund over a long period. More importantly, it helps you maintain the habit of saving.

Also think about systematically putting all or part of your unexpected income into your savings: a tax refund, a bonus, or a gift… This could make your savings bigger.

Not having an emergency fund

Many people, even with a large income, are unable to deal with emergencies and unforeseen expenses. They usually resort to personal loans, which puts them in a vicious circle: they will have to pay back the loan in addition to facing other contingencies in the same way.

Having an emergency fund will allow you to have a good margin of maneuver when you have to face this kind of situation. It will also allow you to avoid going into debt or being in debt even more.

An emergency fund should be built up bit by bit, by setting aside a portion of your income on a regular and consistent basis. The funds it should contain can range from one to several months of income. It must also be accessible for use on short notice. And, if you ever need to use it, don’t forget to rebuild it afterward.

By avoiding these mistakes in your finance management, you will be able to reach your financial goals faster. The most important thing is to take it one step at a time, creating new, healthier, and stronger habits.