10 bad financial habits you really ought to break

Most of us have got bad habits - it's part of being human. But with the price of everything from crude oil to a loaf of bread rocketing skywards, poor money management shouldn't be one of them.

Check through these common financial faults to see which ones you recognise - and what you can do to clean up your act.

1. Living beyond your means
If your pay is never quite enough and you have to borrow to make ends meet, you are already on the slippery slope to financial difficulties. The first step to sorting yourself out is to stop thinking of budgeting as a frightening word. List all your income and outgoings to give yourself a clear picture of your spending and then look for ways to cut back. Ask yourself if you really need so many glossy magazines each month or that expensive satellite TV subscription and shop around for cheaper deals.

2. Too many credit cards
Do you accumulate credit cards like boys collecting toys? If so, you could be doing serious damage to your finances. Introductory offers may be seductive but before you know it your debts can pile up and you could be struggling. Try to pay off the balance on credit cards with the highest interest rates. You also need to learn to say no - and mean it.

3. Living for today
We've all done it - blown that money we were putting aside for a boring necessity on something a bit more exciting. But spending everything you earn and not putting anything by for tomorrow is a recipe for disaster. Even saving a small amount will give you greater financial security and help you through an emergency, such as a boiler breaking down, car repairs or losing your job.

4. Letting your finances slide
It's one thing not knowing exactly how much you have in the bank but quite another to be unaware of how much debt you've accumulated and how you are coping with it. Checking your credit report is a good way to check on commitments. This is your personal credit history and lists borrowing, from credit cards and loans to your mortgage, along with your repayment record. Lenders will probably view it when you apply to them, so it needs to be up-to-date and accurate.

5. Burying your head in the sand
Thinking your money troubles will sort themselves out is a classic sign of denial - and doesn't work. If you're having trouble making repayments on a loan, credit card or mortgage, talk to your lender as soon as you can. You may be able to arrange a payment holiday or another way to lower your monthly payments. There are also many sources of free, independent advice, such as Citizens Advice, the Consumer Credit Counselling Service and National Debtline.

6. Missing payments
It's easy to forget a monthly repayment, especially if there are unexpected bills to pay. Unfortunately, you will not only be wasting your hard-earned cash on late payment fees but you could also jeopardise your credit history. Lenders are less likely to offer you the best deals if your payment record is patchy. You may also experience an immediate and painful hike in your interest rate if a payment is more than 30 days late.

7. Failing to plan for retirement
It may not seem a priority now but retirement is going to come sooner or later and you need to prepare. The earlier you start a pension, the better - and you will have longer to build your fund. Talk to an independent financial advisor about the best options and don't forget to review your plan regularly.

8. Not being credit card savvy
You may think you're being clever by using low or zero per cent balance transfer rates but you'll only come out on top if you pay off your balance before the introductory deal expires. Look for extra income to clear your debt, find ways to cut back on your spending or think about using a low-interest loan to reduce the burden of repayments.

9. Putting your identity at risk
Every time you throw a bank or credit card statement in the bin or give personal details to cold callers, you are laying yourself open to identity fraud - and criminals using your data to borrow money and run up bills in your name. Always destroy documents showing your personal details before throwing them away, especially if they include financial information. Another precaution is to check your credit report regularly for suspicious entries - it's so effective that it's recommended by the Home Office.

10. Forgetting to reward yourself for good behaviour
Cutting out all of life's little pleasures will almost certainly lead to failure when it comes to beating your bad habits, so don't be too hard on yourself and make sure you have a treat now and then. That way, you're les likely to go on a financial binge.