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Top 5 bad spending habits to break in the new year

Smart spending, building your savings and knocking down that debt are all within reach in the new year, and we have a five quick tips to help you along the way.

With the holiday season closing out, minds are fast moving to January and New Year’s resolutions. We’ve all made them and rarely do we stick to them, but resolutions to break your bad money habits can be made easy to start and even easier to achieve. Smart spending, building your savings and knocking down that debt are all within reach in the new year, and we have a five quick tips to help you along the way.

1.Nail down your most unnecessary spending

Knowing where your money is going is a great first step in knowing how to break your worst spending habits. From frequent dining out and home food delivery apps to paying too much for snacks at the movies, taking a closer look at where and when you spend can help you figure out where you can start saving. Even noticing how often you use monthly subscriptions to services can help you hone in on where you can save a little more each month. How often are you using Spotify and Netflix? Are you actually sticking to your gym routine? Is there anything that comes at no cost that you can use to replace these monthly subscription services? Asking yourself these questions and being honest about your regular usage could help you nail down where you could be spending a lot less money.

2. Pay more than your monthly minimums on your debt

The longer you carry a balance on your credit cards and your lines of credit, the more interest you’re going to pay. Making larger monthly contributions to your debt not only pays off what you’re owing more quickly and ensures you’re paying less in interest, it also can benefit your credit score. Far too often we can find ourselves looking at our credit statements and budgeting around the minimum monthly payments and thinking we have a little more still for disposal income. Those minimum monthly payments barely scratch the surface of what’s owing and often cover mostly the monthly interest. By making those larger monthly payments beyond the minimum, you can save a lot more money in interest payments and set yourself up for a much better monthly cashflow without the looming debt.

3. Stop using credit while you’re paying off credit

Putting larger monthly payments on your credit cards isn’t open permission to keep using credit cards. Especially after the heavy holiday spending, this is the time of year when it’s most important to put your credit on ice until the balance is paid off. A cash diet can be a difficult adjustment but is the most surefire way for paying debt that’s costing you more in interest charges. Set up a strict budget for each month that includes all monthly bills and debt payments beyond the monthly minimums and stick with it. Spending doesn’t have to completely stop in January, but making a budget with a strong cash focus makes sure that anytime you do decide on some spending, you have the cash in hand and you’re not relying on any more credit.

4. Avoid January sales

January always sees a lot of big sales creep up. Shops are looking to clear out the last of the stock that didn’t sell over the holiday season and Boxing Day. The temptation of these kinds of sales can be hard to resist, but with heavy holiday debt still fresh it’s important to avoid the allure. The comfort of retail therapy during the January slump adds to why shopping during this time of year is an important impulse to combat. Battling the January sale inclination doesn’t have to mean going into winter hibernation. There is no shortage of fun and low to no cost winter activities people can dive into that doesn’t involve making stops at the mall. Check out this CBC list of 50 things Canadians can do to get outside and enjoy the wintertime.

5. Set up a Tax-Free Savings Account

Poor spending habits can be made even worse when you don’t have any savings set up. When it comes to unexpected expenses, making big purchases and thinking about the future a Tax-Free Savings Account is one of the best assets you can have to help keep you financially secured. Luckily, Motive has an award-winning TFSA for you! Far too many Canadians rely on credit cards and other forms of debt to help them out when an emergency arises, to book vacations and travel plans, and even auto repairs. Tax-Free Savings Accounts help keep money aside from normal monthly expenses so you have the help and funds you need. And best of all, Tax-Free Savings Accounts build interest over time, so the money you put away can start making you money as well.

Have any pieces of advice of your own that we missed? What are your worst spending habits that you want to break? Let’s continue the conversation on social media. Like us on Facebook and Follow us on Twitter to let us know how you will be changing your spending habits and setting yourself up for more financial success in 2019.