Of all the things that keep you in debt, your behaviour is the one thing you can control. By having a better understanding of the behaviours that lead to bankruptcy, you can reduce your risks and get back on track financially. Here are some common negative financial behaviours to avoid.
1. Carrying More Credit Cards
This is one of the major reasons people end up filing for bankruptcy. Carrying too many credit cards will not just make you overspend, it will make it difficult to budget properly and make the required payments each month. Essentially, it is recommended that you have at most three different credit cards. These include gas cards, store cards, and other specialty cards.
If you prefer to have more than three credit cards, it’s best to leave them at home, for emergency purposes only. This way, you won’t be tempted to use them. Pay off the balance and keep your cards hidden away if you don’t want to cancel them altogether.
2. Impulse Buying
Those who find themselves in debt are often the type who buys anything that comes their way. They don’t usually have a planned purchase. Impulse buying can lead to bankruptcy. For some, they justify a need for buying an item that has little or no significance. More so, impulse buying makes you lose focus in terms of reaching your financial goals.
3. Spending Future Earnings
Another way people fall into the trap of debt is by spending future earnings. Many people spend today the money they expect tomorrow. You may want a new car, computer, or purse, but you can’t afford it now. So, you put it on credit knowing you’ll receive a paycheque soon.
The thing is the money you earn will probably get to you before the credit card bill, and it will be redirected to other pressing needs. And when the credit bill arrives, you may not be able to pay it, making you slip further into debt. Spending future earnings is never a good idea.
4. Failure to Create a Budget
One of the positive financial behaviours to adopt is budgeting. Being able to create and stick to a strict budget will help you improve your financial situation. If you fail to create a budget, you’ll keep finding yourself in the pit of debt. You can avoid bankruptcy Brampton and other financial problems by setting up a budget. This will serve as a map to follow and you’ll know when you’re on the wrong path so you can retrace your steps. A budget will be your guide on the path to financial freedom.
5. Keeping up with the Joneses
Of course, there are times when you’re envious of your friends’ possessions or lifestyles. In order to meet up with their standards, you might spend more than budgeted. You might book a group trip you can’t afford, for example. Trying to keep up when you don’t have the financial means to do so will cause you to overspend. Keep in mind that it’s difficult to measure success from the outside. Remember your financial priorities.
