If you’re living paycheck to paycheck, constantly worrying about how you’re going to pay next month’s bills, or if you think that getting out of debt is just too hard, it might be time to reevaluate your spending habits.
Avoid these 10 bad spending habits that could be holding you back from being financially healthy and finally having the life that you want.
Hiding Unimportant Bills
When you’re trying to save money, it can be tempting to hide bills that seem unimportant.
However, this is a dangerous habit that can lead to late fees and damage your credit score. Instead of hiding bills, make a budget and set aside money each month to pay all of your bills on time. Your wallet will thank you for it! -Including Your Hidden Expenses: It’s important to include hidden expenses when making a budget.
Items like groceries, gas, dry cleaning and hair appointments are not always included in our budgets but they are necessities we have to buy regularly.
-Paying With Credit Cards: Using credit cards is often thought of as the easy way out but they actually carry many risks including high interest rates and the potential for late payments.
One of the worst things you can do for your financial health is to charge everything.
Not only does this rack up debt, but it also makes it difficult to keep track of your spending. Try to use cash or a debit card for most purchases, and only use credit when you absolutely need to.
In addition, it’s important to establish an emergency fund with at least six months worth of living expenses. It’ll be easier to budget if you have an amount set aside that will cover any unexpected expenses such as job loss or medical bills.
Consider using a high-yield savings account to save towards your goal. The goal should be enough to cover three-to-six months’ worth of living expenses. For example, $12,000 would cover three months while $24,000 would cover six months.
Even though this seems like a lot of money, experts recommend having enough in savings so that you don’t rely on credit cards in case something goes wrong.
Saving just $250 per month could add up to about $6,000 over the course of a year. If you’re able to increase that number to around $500 per month, then you’ll have almost double the savings in just one year. And after five years, you’ll have saved $30,000! These amounts may seem daunting right now but they are well worth the wait.
Plus, once you reach your savings goals and start paying off debt it will feel even better knowing that all of your hard work has paid off.
Giving In To Your Impulses
When you see something you want, it can be hard to resist the urge to buy it. But if you’re trying to save money or get out of debt, giving in to your impulses can sabotage your efforts.
Try to avoid making snap decisions about purchases, and take some time to think about whether you really need something before you buy it.
You might decide that you don’t actually need a new TV set after all, for example. Or maybe you’ll decide that buying a new piece of clothing is worth the sacrifice. Either way, taking time to consider your options is much better than just buying impulsively and regretting it later
Making New Year’s Resolutions: We’ve all seen it: people who are so excited to start their New Year’s resolutions they tell everyone they know what they’re going to do. And then on January 2nd they gave up because they didn’t stick with their resolutions.
That doesn’t mean you should stop making New Year’s resolutions altogether–it just means you should keep them more private so that other people won’t pressure you into breaking them too soon.
For example, instead of telling everyone at work that you’re going to cut back on your alcohol consumption this year, tell them you plan to drink less during happy hour.
There’s no shame in saying no when someone offers you a drink! Giving In To Peer Pressure: It can be difficult not to give in when friends ask for loans or favors, but often those small favors add up over time and create significant financial problems.
Not Understanding The Value Of A Dollar
When you don’t understand the value of a dollar, it’s easy to overspend on things that you think are worth more than they actually are.
This can lead to financial problems down the road. To avoid this, take some time to learn about personal finance and what things are truly worth your hard-earned money.
For example, will an hour at the gym be better for your long-term health or is buying a new pair of shoes? Will buying lunch out every day add up or would cooking in bulk help? These are tough questions but they’re important ones to ask yourself.
It’s impossible to answer them without considering all aspects of life. What does your schedule look like? How much money do you make per month? What other expenses do you have each month? There are so many factors to consider when making these decisions but if you know how much something costs, it’ll be easier to decide if it’s worth the purchase. Sure, one person might spend $200/month on food while another spends $50/month.
But both people may be spending too much money in different ways because they don’t have enough information to work with. A good rule of thumb is to figure out where your income goes each month and then budget accordingly – just with less wiggle room.
Poor Financial Management
One of the worst things you can do for your financial health is to have poor financial management habits.
This includes things like not tracking your spending, not budgeting, and racking up debt. These habits can quickly lead to financial ruin, so it’s important to avoid them at all costs. Fortunately, there are plenty of great books on these topics that will teach you how to manage your money more effectively.
It may take some time and effort to get these habits under control, but the benefits will be worth it in the long run.
Once you start getting into a good routine with your finances, it will become second nature. And don’t forget to track every penny – both income and expenses – as this is one of the most effective ways to monitor your finances.
Consider using a spreadsheet or app to help you categorize each expense (e.g., rent, food) and document where your money goes each month.
Having accurate records of what you spend helps you know where to cut back when necessary or create goals for upcoming months.
For example, if you want to save $500 per month from now until September 1st, then make sure that’s the goal amount in any spreadsheet or app you use throughout the year.
Buying Stuff Instead Of Experiences
One of the worst things you can do with your money is blow it all on material possessions.
Not only will you end up with a bunch of stuff you don’t need, but you’ll also miss out on valuable experiences. Experiences are what make life memorable, not things. So next time you’re tempted to splurge on a new piece of technology or clothing, ask yourself if it’s something you really need or if it’s something that can wait.
What would be better than buying a book? Or going to see an exhibit at your local museum? And if you’re planning for retirement, this habit could be costing you big-time.
According to a recent survey by TIAA-CREF, 77% of retirees surveyed said they regretted spending so much money on nonessential items during their working years. For example, if you spent $5 every day at Starbucks instead of saving it in a retirement account where it could have grown into $500 by the time you retire, that would amount to more than $3,000 over five years.
Keeping Up With The Joneses
A lot of people think that they need to spend money to keep up with the people around them, whether it’s their friends, family, or neighbors.
But this is a dangerous habit to get into, because it can lead to serious financial problems down the road. If you’re not careful, you can easily find yourself in debt or even bankrupt.
So if you want to be financially healthy, it’s important to avoid this trap. It doesn’t matter how much your neighbor spends on their house, car, clothes, etc., as long as you can afford what you buy and stay within your budget! Remember, just because someone else has something doesn’t mean you have to have it too.
That may seem like an easy way to solve all your problems, but the reality is that there are usually other ways for you to solve those issues.
Maybe you don’t really need a new house if yours isn’t too old, or maybe you could put off buying a new car until next year when prices go down.
Do whatever you can to save money so that when you do decide to make an expensive purchase, it won’t feel like such a burden!
Materialism And Consumerism
In our society, it’s easy to get caught up in materialism and consumerism. We’re bombarded with ads telling us we need the latest and greatest products, and it can be hard to resist the urge to splurge.
But if you want to be financially healthy, it’s important to avoid these bad spending habits. There are plenty of frugal alternatives that will give you similar satisfaction without draining your bank account.
For example, rather than buying new clothes every time you go shopping, why not reuse an old outfit? Buying used items is often cheaper and more environmentally friendly than purchasing new ones. Plus, you’ll have a variety of styles and colors to choose from.
Another way to save money is by cutting back on eating out or drinking at bars or restaurants. All that money spent on food could add up quickly! The key to being frugal is figuring out what makes you happy so you don’t feel deprived when saving money – for some people this might mean treating themselves once a week with a restaurant meal, while others may find joy in cooking at home instead. Either way, focus on what brings you joy and spend your money accordingly.
One thing all frugals agree on is that they would much rather put their money towards things they love (and actually use) than pay off debt they don’t care about. Save now so you can live later!
Being Afraid To Make Decisions
One of the worst things you can do when it comes to your finances is being afraid to make decisions. Whether it’s about where to invest your money or whether to splurge on a new outfit, not making a decision can often be more costly than making the wrong one.
Don’t spend so much time second-guessing yourself that you end up doing nothing at all. Remember that every choice will always have pros and cons, but what matters most is if you’re happy with the final outcome.
When in doubt, ask someone else for advice before proceeding with any decision.
Under Insuring Yourself
One of the worst spending habits you can have is not insuring yourself against potential risks.
This includes things like not having health insurance or not having enough life insurance.
Not only will this leave you vulnerable financially if something happens, but it could also ruin your credit score and make it difficult to get loans in the future. Make sure that you’re covered for everything with good insurance plans so that your family won’t be at risk should anything happen.