Five bad habits making you poor

Senior actuary at Metropolitan, Nidia Lourens, shares money habits that you probably don’t realise are stopping you from reaching true financial freedom.

Senior actuary at Metropolitan, Nidia Lourens, shares money habits that you probably don’t realise are stopping you from reaching true financial freedom.

Published Mar 5, 2024

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By: Nidia Lourens

I DON’T want financial freedom – said no one, ever.

We all want financial wellness, but we might just be guilty of certain money behaviours that are stopping us from reaching wealth in the future – without even realising it.

While avoiding these behaviours might not get you on the cover of Forbes magazine, it will stop you from becoming poorer over time, curtailing your chances of achieving wealth.

Think of them as ‘bad habits’ that you need to get a handle on as soon as possible.

Not budgeting

There’s a reason that everyone says that drawing up a budget is the first step toward financial security. Without a clear, written budget (no, having one in your head doesn’t count!), it’s easy to spend more than you earn. The secret of financial wellness is to live within your means, and working to a budget creates discipline.

Spending too much time online

Almost everything we’re exposed to online is designed to make us spend money. From that ad of a cute dress following you around social media, to a retailer’s newsletter bombarding you with a product ‘special’, to an influencer promoting a miraculous skin cream – we don’t even realise that we’re being inadvertently targeted every time we go online.

While it's unrealistic to avoid the internet forever, we can be mindful of the amount of time we spend online – especially on social media – and become aware of how advertisers are constantly looking for avenues to monetise our browsing habits and promote their products.

Before you purchase something, give yourself 24 hours to think it through. That will dampen the immediate dopamine rush that comes with buying something unnecessary, and you will be in a much better state of mind to make a rational decision.

Getting too comfortable with credit

Too many of us see credit as a way of life. We buy on credit, slip into our overdraft, or swipe our credit card needlessly while exposing ourselves to hefty interest rates and debt servicing fees that eat into our money.

Bad debt should be avoided at all costs. It’s not a way of life – rather, a last resort. And if you do happen to use your credit card, aim to settle the outstanding balance as soon as possible, to avoid these fees.

Thinking that only saving will get you rich

Saving is important, but there is ultimately a cap on how much you can save. Saving alone is unlikely to make you wealthy – the other piece of the puzzle is to make more money. Easier said than done, right?

But if you look carefully, there could be a plethora of opportunities available to you, which are right under your nose. A side hustle – where you monetise a skill set or hobby or provide a service – is one way to bulk up your earnings. Investing is another. Or you might be due a pay rise, which you’ve trying to work up the courage to ask your boss for.

To achieve true financial freedom, you need to save more but you also need to make more. Saving alone is unlikely to get you wealthy.

Treating money talk as taboo

We’ve been taught by previous generations that talking about money is off-limits – we don’t discuss what we earn, spend, or our debt.

But we should. There is still a great deal of stigma attached to talking about money, but by keeping our financial affairs hidden from those people who may need to know about our financial status – like our loved ones – we are setting ourselves up for failure.

For example, having an honest conversation with your partner about your debt and financial goals is important, as is educating your kids about reckless spending.

Another way of breaking this habit is to consult a financial adviser. You will need to give them a full picture of your finances, warts and all – but once they have a clear understanding, they will be able to advise you on what you can do to put yourself in a better financial position.

* Lourens is a senior actuary at Metropolitan.

PERSONAL FINANCE