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shutterstock_188429726We’re all prone to habits. These include financial habits that have been passed down to us from our parents, such as saving up money for a rainy day and never spending more than what we earn. While majority of these habits are helpful, there are also those that we think are good but are, in reality, harmful to our finances in the long term.

Here are some habits you should avoid inheriting:

1. Not knowing when to say ‘no’. Event invitations, coffee dates, endless dinner engagements and lunches on the weekends can certainly add up when you are trying to budget. Learning to prioritise the events/occasions that you really should attend, and learning to say ‘no’ to the various lunches and dinners that are optional extras, is a useful habit to acquire and will help you save thousands in the long run. A good tip is to limit yourself to a certain number of social ‘meals’ or ‘outings’ per week and then use this number to prioritise the invitations you’re receiving throughout the month.

2. Relying too much on credit cards. Credit cards can be helpful because they allow you to make purchases without having to carry cash, and make big-ticket purchases up-front without having to make installment payments. However they can become problematic when you begin to think of your credit card as free money.

As with spending cash, you should only be spending what you can afford when using your credit card. This will help ensure that you won’t have problems paying for it when your monthly bill arrives and will save you on interest charges because you will be able to pay it off on an ongoing basis.

3. Not planning ahead. This is especially the case if you want to buy a house. Before you do so, be sure to plan ahead, because it is most likely the biggest debt you’ll ever take on in your life and the one that takes the longest to pay. On average, mortgage terms in Australia range between 25-30 years, so it is a serious commitment and one that requires some forward thinking.

People often fall into the habit of taking out a mortgage based on their current financial status, however fail to consider that their financial status might change in the coming years. If you’re currently single, for example, your personal circumstances and financial capacity will change significantly once you get married and have children.

Working with a mortgage broker can help you plan ahead. They will do so by helping you find a loan that is suited not only to your current situation, but also to your circumstances in the future. They can make shopping for your ideal loan easier because they work with several lenders that can provide them with competitive deals.

Many people tend to inherit their financial habits from their parents, just as you would with any other types of habits. In general, living within your means, keeping your expenses in check, and getting professional advice on big financial decisions such as purchasing a house, will all ensure that you have the best chance at financial security.

Written by Dean English.