Over time, you can start to develop habits. Unfortunately, not all of those habits may be healthy. Some bad habits, especially those that have to do with money, can cost you more than others. You may not even realize you’re engaging in not-so-stellar habits, making it that much more essential that you break them. Here’s a look at common bad money habits and tips on how to break your way free of them.
Failing To Pay Off Your Credit Cards in Full Each Month
By carrying a balance on your credit card, you’re essentially allowing a bad situation to curdle to something much worse. No matter how small your interest rate is, you’re still racking up debt that you don’t have to. If you just aren’t in a place where you can go ahead and easily pay off your credit card balance, do what you can to at least pay more than the minimum monthly amount.
Not Saving for Retirement
Even if your current employer sponsors a 401(k) plan, there’s nothing wrong with beefing up your retirement savings with an alternate savings account like a Roth or traditional IRA. There’s no telling what the future holds in regards to programs like Social Security. Having access to supplemental financial resources during retirement could help you avoid running out of money during your golden years. If possible, maximize your employer-sponsored plan, so you can take full advantage of the free money available to you. So how much should you aim for saving? It’s best to opt for anywhere between 10 and 15% of your pre-tax income.
Using Money in Your Savings
If you’re someone easily swayed by impulse buys, you may find yourself dipping into your savings account when you have no business doing so. By unnecessarily depleting your savings, you’re doing your future self a disservice if a financial emergency shakes up your life. You can curb this impulse by moving your emergency savings into a bank separate from the institution that handles your checking account. That way, you have a few more hoops to jump through before you can access your money, giving you time to rethink your decision. Also, try to find a bank that offers high interest rates on your money.
Spending More Than You Earn
Before you buy your next cup of coffee, takeout dinner, pair of shoes, or any other nonessential purchases, ask yourself if doing so will tip you over to spending more money than you earn, even if it’s just by a couple of dollars. Having more money going out than coming in is one of the biggest financial blunders you can make, as it can trip you up for months. You can break this habit by giving yourself a cash allowance rather than using your card for anything not on your budget. When you’re out of cash, you’re no longer allowed to buy movie tickets, go out for drinks with friends, or the like.
Impulse Purchases
Speaking of nonessential purchases, such purchases can also trip you up financially. No one can blame you for falling prey to impulse buys. After all, marketing and advertising are designed to make you think you need to take advantage of a sale or discount now, now, now. True, you can most certainly save money buying something on sale, but the point is that you’re still spending money on something you may not even need.
To free yourself of this habit, force yourself to wait a day or two before buying anything that’s not on your budget. During that time, think about whether you need the item or just want it. How much will you use it? Can you get it at a lower price elsewhere without sacrificing quality? By answering these questions, you could avoid a healthy heaping of financial regret later on.
No Saving With a Goal
Sure, it’s great to put back money in a savings account, but it’s even better to save with a goal in mind. When you save with a specific goal, you want to reach it that much more and that much faster. Without a goal or a specific plan to reach that goal, you may drag your feet when it comes to putting money back. Do you need emergency savings? Perhaps you want to remodel your house or save up for a nice vacation. If you don’t really have a savings goal, just focus your saving efforts on retirement.
Using ATMs Outside of Your Network
To give yourself the cash allowance touched on above, you may visit and ATM to make a withdrawal. Before you do, double-check to ensure the ATM is inside your bank’s current network. If it’s not, you’ll likely be charged a fee from the ATM’s owner. Even worse, your own bank may also charge you for using an out-of-network ATM. Even if the fee isn’t terribly high, that’s still money you didn’t have to spend, money you could put into a savings or retirement account.
Do you recognize any of the above habits in yourself? If so, do yourself a favor and take action on breaking them. Doing so is sure to pay you back for years to come.
