Replace bad financial habits

By, Carla Hindman, Director of Financial Education, Visa Canada

Most people have at least one bad financial habit. Whether it’s impulse shopping, forgetting to pay bills on time or putting off building that emergency fund balancing what you want to do and what you “should” do is never easy.

You might recognize a few of these common bad financial habits in your life:

  • Paying bills after the due date
  • Paying only the minimum required on bills
  • Ignoring bills and letting them go to collections
  • Putting off saving for retirement or a rainy day
  • Impulse shopping or “retail therapy”
  • Not keeping track of how much debt you have
  • Taking on debt to pay for something you don’t currently need.

Ultimately, all of these lead to spending more than you earn and in some cases, bad habits can have a cascading effect.

Here are some ways to turn things around.

Start by identifying bad habits. Sometimes a bad financial habit can be hard to identify. Not sure where to start? Looking through your previous months’ expenses can help you identify purchasing trends or one-off purchases that are part of a larger theme. If you have a budget, you should be comparing projected spending with actual spending on a monthly basis (reviewing online or paper bank statements can make this relatively simple). If you don’t have a budget; now is a good time to start.

Try to figure out what’s driving your behavior. You might need to figure out what triggers your behavior and the reward you perceive afterward before you can change a habit. However, triggers and rewards aren’t always obvious. For example, you might buy big-ticket items when they are on sale because you feel like you’re accomplishing something by “saving” so much. Perhaps you could foster a similar feeling of accomplishment by investing the money in a tax-deferred retirement account and calculating how much it would be worth after years of compound interest.

Aim for healthy financial habits. What habits should you try to adopt? Budgeting is certainly a worthy activity, but also consider the following mix of behaviours and objectives that can help get your finances in order:

  • Pay all your bills on time. In addition to avoiding late-payment fees, making on-time payments is the most important factor in determining your credit score.
  • Make debt reduction a priority. Rather than accruing interest, make a point to pay down debts as quickly as possible.
  • Build and maintain an emergency fund. Having three to six months’ worth of living expenses in savings can help cushion the blow from a financial or personal setback. Need help building an emergency fund? Check out this calculator.
  • Save for retirement. You can put aside a percentage of your income for retirement and invest the money with a Registered Retirement Savings Plan. Find a comfortable contribution to start with, and then try to increase it at least once during the year.
  • Plan your large purchases. To help prevent impulse shopping from draining your budget, resolve to wait at least one day before buying anything that costs over $100 (or whatever amount makes sense for your budget). If you know there’s a large purchase coming up, start saving early by setting a little money aside from each paycheque.

Bottom line: It’s never too late to identify potential financial weak points and replace bad habits with constructive ones.


Article used with permission from Practical Money Skills Canada

This article is intended to provide general information and should not be considered legal, tax or financial advice. It’s always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.


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This information is designed to educate and inform you of financial strategies and products currently available. As each individual’s circumstances differ, it is important to review the suitability of these concepts for your particular needs with a Qualified Financial Advisor.