This New Year, Drop these 7 Money Habits that Make You Poorer

Posted in Ulip Blogs By Finserv MARKETS - Dec 30,2019
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Your financial habits play an essential role in how are well-off you are when the month is ending.

Here’s 7 bad money habits you should kick to the curb before 2019 ends.

  • Being Too Lazy to Budget

Being too lazy to budget is not serving you well. For one, budgeting makes you allocate a fixed amount for every monthly expense. It also gives you insight into where the majority of your money is being spent and where more of it should be going instead.

In a U.S Survey, 68% of responders agreed that having a household budget would help them reach their personal and family goals. 67% of responders admitted that budgeting improves confidence in their financial security. This is validated with the finding that 42% of people who budget save more. A simple way to allocate your expenses is by using the 50/30/20 budgeting rule shown below.


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  • Saving Only What’s Left

Of all bad money habits, saving what’s left at the end of the month is by far the most damaging. Those who are guilty of this financial habit prioritize living comfortably over saving for their future. Living lavishly without thinking about one’s future finances leads to spending money on items that help you momentarily (an expensive dinner) but do not support you in the long-term.

To combat this bad money habit, your first priority when your paycheck arrives should be to save some of it. Have a fixed amount of money that you want to set aside every month as savings. Then, manage your expenses with the leftover income.

  • Taking Too Many Bad Loans

The cons of lavish living extend beyond being a drain for your savings. Another disadvantage of this financial habit is that you end up taking too many bank loans. If your loan will be profitable for you in the long-term, like Real Estate, then it’s a worthwhile investment. On the other hand, loans that are taken on objects that depreciate in value over time are bad, like fancy cars, home theatres, and overpriced skincare items. Bad investments yield low returns. To avoid perpetual debt, your financial planning should involve a fair share of good loans and as few bad loans as possible.

  • Avoiding Insurance Policies

Often, people are intimidated by financial planning because of the variety and complexity of insurance policies. However, ignoring the importance of getting insurance early on is dangerous. Without smart investing, the money in your savings account is decaying over time as inflation increases.

There are thousands of insurance policies that can be chosen based on specific needs. For instance, a term plan offers a cover if the policyholder passes within a specified timeframe. An endowment plan offers both insurance and savings. A child’s plan offer to pay for your child’s education and marriage. Being a careful consumer of the different policies is taxing, but necessary. Bajaj Allianz ULIPs available on Bajaj Markets would be the ideal option, in such cases. With both an insurance as well as an investment component, you can rest assured that your child’s future is safe and financially secure. You can even make use of the partial withdrawal facility at any important milestones in your child’s life.

  • Not Saving for Retirement

Financial planning for one’s retirement is best done early on. One can save significantly different amounts if they start saving for retirement at age 25 versus age 35, as shown below.


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Many websites offer a retirement planning calculator. Based on your current income and expenditure, the calculator will help you assess how much you need to save every month for a comfortable retirement.


One option that offers the best of both worlds (investment and insurance) is Bajaj Allianz’s Unit-Linked Investment Plans (ULIPs), available on Bajaj Markets. They offer the option to invest part of your premiums in equities, debt or both, which tend to offer higher returns than investing in other markets. With plans designed specifically for retirement, Bajaj Allianz ULIPs on Bajaj Markets are a great tool for meeting long-term goals. Your returns accumulate over a long-term period and amount to a sizeable corpus that will be paid out to you as a steady income over the course of their retirement.

  • Dipping Into Savings

Many are guilty of impulse purchasing. Such bad money habits lead to repeatedly dipping into one’s savings. Your savings are precious and must not be touched unless there is an emergency. For some, an emergency is to pay medical bills for an unexpected illness. For others, it might be to pay off a debt that just won’t go away. Either way, treat your savings like a nest egg.

  • Not Caring For a Plan B

When you put all your eggs in one basket, you have no alternatives when that basket breaks. Diversifying is key when it comes to financial planning. Examples of having a plan B are: Have multiple sources of income, a backup fund for emergencies, life insurance for your loved ones. Many people only incorporate such changes after they experience, or witness, an accident. Acknowledge the uncertainty of life and always have a backup plan.

In conclusion, bad money habits are significantly hurting your finances. Your financial habits of today determine your tomorrow.

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