First, the bad news: Good habits normally need to be taught. Most of us aren’t born wanting to work on projects before they’re due or cover our mouths when we sneeze. More seriously, our desire to have fun and impress others typically results in the natural desire to spend, spend, spend. That is much more fun!
Now, the good news: Habits are usually easier to make than they are to break, so if you can establish good financial habits, they’ll tend to stick and could benefit you in the future.
Here are a couple of useful ideas for building healthy credit habits:
Try to only use credit for larger purchases. Wherever possible, pay cash for those smaller items.
Avoid taking out a loan or applying for in-store credit to obtain smaller consumable items. Preferably, you should save up for a few months and then pay cash for these items. Many store accounts do offer an interest free initial period, but once your credit limit is approved, there is a temptation to buy more items and to spend more than you than you originally planned. This impulse buying will result in you eventually paying interest on the outstanding store account balance. So a relatively cheap, small item can become a noose around your neck.
A wiser option is to only use credit for larger purchases such as:
- Education: University or school tuition
- Property: Invest in a flat or house
- Entrepreneur: Start a business
These are options that will assist you in making more money in and for the future. Spending money to make money is a smarter choice.