Your money: How to give up your worst financial habits for good

WE’VE reached the halfway point in Stoptober as smokers up and down the country attempt to quit cigarettes.

But, whether or not you’re taking part in the anti-smoking campaign, why not also consider conquering any nasty financial habits you’ve picked up?

“This Stoptober is a great opportunity to stub out your worst financial habits,” says Sarah Coles, a personal finance analyst at Hargreaves Lansdown.

Not sure you even have any? Well, some of those practices might have become so ingrained that you don’t even notice them.

So what are the warning signs, and how can you kick your worst foibles into touch? Here, Sarah shares her expert insights …

Casually dipping into debt

If you regularly dip into your overdraft, you need to identify regular costs you can cut. This may mean shopping around on essential bills and groceries, or cutting out those things you don’t get much value from, such as gym memberships or expensive media packages.

If you’re a repeat offender, consider setting up text alerts in online banking, which will let you know if you’re running the risk of going overdrawn.

Only paying the minimum amount back on your borrowing

The minimum payment required on your credit card can easily lull you into a false sense of security. But by paying the debt down at a snail’s pace, you could be racking up shocking interest charges.

If you have expensive debts like credit cards, it’s essential to pay them off as quickly as possible. If you have a significant balance, it may be worth switching in order to cut interest payments in the interim. However, if you switch, it’s vital to see this purely as a mechanism for debt repayment. If you’re tempted to rack up more borrowing, you’ll end up in an even more expensive position.

Forgetting about your savings

According to a 2015 study, some 80% of easy access savings accounts hadn’t been switched in the previous three years. Neglecting savings is an expensive habit to fall into.

Even in this era of low interest rates, it pays to make a date to regularly check what you are earning on your savings, and if the rate is no longer competitive, make a switch.

Not making the most of tax shelters

At the start of each tax year, it’s worth taking stock of your savings and investments, and asking yourself whether you really need to be paying tax on them.

Putting plans off

Long-term goals like retirement may seem a long way off, but every day you save makes a big difference. It’s not just the years of contributions you will miss by putting things off, but the effect of compounding returns – which is jaw-dropping.

There are always too many demands on your money, but as a general rule, it pays to invest as much as you can afford for retirement, as early as possible.