How to fix bad financial habits in four steps

In the cost-of-living crisis, managing everyday expenses might feel tricky - but it’s important not to let your money worries get the better of you. With some time, patience and careful planning, it’s possible to take control and get a firm grip on your finances.

From fixing impulse spending to tackling careless debts, it’s worth facing your financial problems with integrity now. In this guide, we’ve explored some of the best ways to get back on track.

Taking control of your finances: Our top tips

1. Cut out careless spending

It’s estimated that UK shoppers make seven big impulse buys every year, with many taking place in physical stores. This is one of the biggest threats to personal cashflow, often triggering huge gaps and leaving us unable to cover key expenses throughout the rest of the month.

Try not to be tempted by the appeal of the high-street store. If possible, work through your bad habit by replacing it with another action. Every time you feel the impulse to buy something, go and do something else. Whether it’s a brisk jog or a cuddle with your dog, you’ll feel better for it - and so will your bank balance.

2. Manage your debts

It can be hard to cope when you need help with debt.

Debt isn’t necessarily a bad thing to have, but it becomes a problem when it’s more than you can afford to pay back. While most adults in the UK have debt of some kind - either in the form of a mortgage, a credit card or loan repayments - it’s easy to lose control without careful planning. Without a realistic approach, your personal finances can spiral.

If you’re struggling with debt now, sorting it out should be your priority. You can use a debt consolidation loan to combine multiple debts, ask your bank for help, or speak to a financial advisor to get yourself on track with a personal plan.

3. Set personal goals

Setting yourself a target is a great way to inspire yourself to save and cut spending too.

Whether there’s something you’ve seen that you’d love to buy, or you’re motivated by the challenge alone, you should try to wait until your next payday to purchase it. Or, you could aim to always have a minimum balance in your bank account and never spend beyond it. Alternatively, you could set a weekly budget and use cash to implement it.

These tactics might feel frustrating, but it allows you to keep your spending controlled - and save more of your money for those unexpected costs.

4. Open a savings account

Finally, don’t let anything hold you back from opening a savings account.

Even though it might feel pointless now - especially if you’re not earning as much money as you’d like to - there’s every chance that your situation could improve soon. When it does, you’ll be prepared to save.

Once you’ve opened a savings account, it’s a good idea to work out how much money you can realistically afford to set aside each month. It doesn’t matter how small you start: even with £100 put aside every month, you’ll be more than £1000 better off by the end of the year.