Do you have any vices? Do you have any financial vices? We bet that you have one or more financial vices draining your financial accounts. Virtually everyone has at least one bad habit regarding their money.
- Most people understand that their spending habits are a major contributing factor to their overall financial well-being.
However, many have difficulty conquering their spending demons, especially the expenses associated with their vices.
In today’s MoneyTalk, we will talk about financial vices and discuss how to get rid of your bad spending habits. And replace them with positive, productive financial habits.
Table of Content:
Why Should We Be Aware of Financial Vices?
What Are The Most Common Form of Financial Vices?
What Are Financial Vices?
Vices! In simple words, they are the immoral and wicked personal characteristics we all have. The definition, in general, itself is a “little” vague in nature. The term’s meaning is relevant as per the circumstances.
- There typically are different vices in different aspects of life.
- The actual proportion of their presence also differs from person to person.
- Moreover, something that could be considered a vice by someone could be viewed as a virtue by someone else.
Financial vices refer to harmful behaviors that people adopt in their financial lives. It is characterized by excessive spending, borrowing, and gambling. These behaviors can lead to serious financial problems such as debt, bankruptcy, and foreclosure.
Financial vices are often the result of impulsivity, greed, or desperation. They can also be caused by a lack of financial knowledge or understanding.
Why Should We Be Aware of Financial Vices?
Most financial vices are done to “feel better” or “blow off some steam.” And sometimes, these are done due to a lack of attention towards financial actions. Though some vices are unhealthy, some are still tolerable if done in moderation. It falls entirely on individual conscience and morals as per the circumstances to determine what is vice and not.
- Financial vices are habits and addictions, and they have a lot in common; the longer they exist, the bigger they get.
- Financial vices can have devastating consequences.
They can ruin your credit score, leaving you with high-interest rates and making it difficult to borrow money in the future. They can also lead to debt, bankruptcy, and foreclosure. Financial vices can cause immense stress and anxiety and can destroy relationships.
What Are The Most Common Form of Financial Vices?
The 5 most common forms of financial vices which impact your financial lives are:
Coffee Shops
Coffee is one of the most consumed beverages in the world. It’s also one of the most expensive, and, per analysis, the average American spends about $1,100 on coffee each year. That’s more than $3 per day! If you’re spending that much on coffee, it’s time to reconsider whether it is worth buying a cup of coffee every day.
Maybe it is worth buying a bottle of instant coffee mix or brewing it at home and carrying it in a thermos wherever you need it. This will undoubtedly cost less than $150 a year vs. the $1,100 that people spend each year.
Smoking
Smoking is one of the most common addictions in the world. It’s also one of the most expensive. This particular vice takes a tremendous toll not just on your health but also on your finances. The average smoker spends about $1,000 a year on cigarettes. Smoking is also one of the leading causes of lung cancer and related diseases.
If you were to get cancer due to smoking, your hospital and treatment costs would run into tens of thousands of dollars. Not only that, but many health insurance providers also charge a higher premium for smokers.
If you have this vice, consider giving up smoking altogether, which will be a positive for your health and a big positive for your savings.
Drinking
Drinking can also be expensive, especially if you drink alcohol regularly. If you quit drinking or drink in moderation, you could have significant savings. An average American spends about $800 a year on alcohol.
Additionally, if you happen to go to bars, you need to watch your wallet. Combined with the drinks cost, the tips you would give to the bartender also add to your expenses.
Gambling
Gambling is another vice that can be costly. The average gambler spends about $500 a year on gambling. While winning anything is usually low, the greed and hope of winning can turn many folks into addicted gamblers.
- If you are a fan of basketball, you may have read how Michael Jordan, a very wealthy player, had run into huge debts due to his gambling addiction.
- If you want to become financially savvy, this is one vice that you should definitely stay away from.
While it is certainly okay to do some gambling for fun, such as when you are visiting Las Vegas, always have control over how much you are willing to lose. Always play safe and be wise, even in such settings.
Eating Out and Take Outs
Another financial vice is eating out all the time. It’s so easy to grab a quick lunch or dinner when you’re on the go, but those expenses can add up. If you eat out five days a week, you could easily be spending over $1,000 a month on eating out! That’s a lot of money that could be better spent elsewhere. You should consider eating out only on special occasions or when you don’t have time to cook.
These days, ordering food via apps such as GrubHub, Uber Eats, DoorDash, etc., is becoming very popular. These companies add a lot of extra fees and the expectation that you will tip the delivery person. Eating Out or Ordering In both causes a lot of drain on your wallet.
What Are the Ways to Control Financial Vices?
While some financial vices could very well be addictions, here are a few tips to help you take control of your financial sins:
1. Track Your Spending
This is the first and most important step to taking control of your finances. You can’t change your spending behavior if you don’t know where your money is going. Start by tracking all your expenses for one month.
- At the end of the month, take a close look at where your money went and pay close attention to how much you ended up spending on your vices.
- Once you see these numbers, calculate how much you are spending over the year.
- Calculate how much you had spent on Coffee, Smoking, Drinking, Gambling and Eating Out / Take Outs.
Tracking your spending will make you aware of how much your vices are costing you. This knowledge will likely trigger a resolve inside you to become better with your spending on these vices.
2. Understand Your Spending Triggers
You will always feel that drinking coffee are Starbucks is a daily routine that you can never change. Smoking and drinking are necessary for you because your body just can’t live without the hit from nicotine or from a drop of alcohol. And your hands may constantly itch to go and gamble in the hopes of hitting the jackpot and becoming rich in an instant.
- However, have you ever considered that your spending on these vices may have been triggered by negative emotions like anxiety, boredom, or depression?
If this is the case, it’s time to take a step back and reassess your relationship with money. Understanding why you can’t break these habits will lead you to exercise control over your spending whenever your body wants to spend money on any of your vices.
3. Set Short-Term Financial Goals
The first and most crucial step in overcoming your financial vices is to set personal financial goals. Initially, these goals should be short-term and realistic.
For example, if you are currently spending $100 a week on lottery tickets, your goal could be to reduce this amount by $20 over the next two weeks. If you can make this work for two weeks, you can certainly stick with this behavior over the long term. Similarly, you can set a goal of spending less than $25 on eating out or take-outs this week. If you can stick to this goal, you will undoubtedly gain confidence in repeating this good financial behavior over time.
4. Plan for Some Occasional Indulgence
Making small, regular purchases that make you happy can help stave off the urge to create more significant, more impulsive buys. Permitting yourself to spend a set amount of money each week on your financial vices is perfectly fine.
You must create a budget for these vices and then stick to your budget and don’t let your weekly “treat” turn into an expensive habit. Consider drinking coffee at a coffee shop only twice a week instead of drinking it every day. Similarly, you can gradually decrease the number of times you are eating out or smoking, thus saving money on your financial vices.
5. Use MoneyPatrol App To Budget Your Spending on Your Vices
Consider using MoneyPatrol to track how much you are spending and where. MoneyPatrol is the best money tracking app, and with this app’s help, you can easily find out how much you have been paying on your vices. You can even create Budgets for your Vices and keep track of your spending on them and stick below your budgets.
Remember that even if you can save $200 by controlling your spending on your vices, these savings add up to $2,400 and about $24,000 in 10 years. If you were to invest these monthly savings in the stock market over the 10 years, you would most likely have way more than the $24K in savings.
Final Thoughts
These financial vices are a bloodbath of their own. These vices can quickly become a significant financial burden, from overspending to racking debts. Suppose you’re looking to get your finances in order.
- In that case, it’s essential to be aware of these most common financial vices and understand how you can overcome them.
- By making a few simple changes to your spending habits, you can save yourself a lot of money in the long run.
- We often consider these financial vices as essential things in life.
But, if you are honest with yourself, you need to understand that these vices are causing a drain on your finances and are slowing you down from achieving your financial goals. Getting rid of these vices or at least gaining control over them will be crucial for success in your financial journey.
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