The same as how good habits can help to make you rich, there are countless bad habits that will make you poor much more quickly. Bad habits are never easy to break, but when the damage caused by these common practices is put right before your eyes, you will be motivated to get them out of your life for good!
Here are seven extremely common bad money habits that can weigh on your finances:
1. You don’t have a budget
Everyone should have a budget, even if you’re making a million dollars per year. It’s easy to spend whatever money you have, even if you don’t have much to begin with. If you fail to set parameters, spending can get out of control in a hurry.
● Get together all your monthly bills and set a simple budget. Count every single expense. Coffee before work or snacks at the gas station are often the items that add up to the biggest drain on your finances.
2. Carrying a credit card balance
No investment can overcome high interest credit card debt over the long term. Take a look at your latest statement to see just how much making just the minimum payment is costing you. Depending on your interest rate and the account balance, it can easily be thousands of dollars per year that you don’t need to spend.
3. You never set up an IRA
Time is money. The more money you sock away right now, the more funds you’ll have in retirement. The outcome depends almost entirely on when you get started. IRAs are wonderful retirement tools if you fund them fully every single year.
4. Not saving
If you pay everyone else first every month, there never seems to be anything left over to save. Pay yourself first, and then pay your bills with what’s left. Many employers can have earnings automatically deducted from your paycheck and put into a separate account. Save some money every month.
5. Buying a new car
Brand new vehicles of all types lose an enormous amount of value the minute you drive them off the lot, but especially high-end cars. Look for certified used cars that are a few years old, with relatively low mileage. You will frequently be able to find a gently used car at half the cost of a new one and with minimal wear and tear. These cars usually still come with warranties as well, if you buy from a reputable dealer.
6. You’re not sweating the small stuff
Be honest with yourself about how much your habits are hurting your bottom line. Do you buy an expensive coffee every single morning of the week? Do eat lunch out every day? Do you smoke? Do you drink half a bottle of wine every night? Look in depth at your bank statement to see what’s really going on.
● The smallest leaks can sink big ships. Fix any financial leaks before they get out of hand.
7. Turning down the employer match at work
Any time you leave free money on the table it’s a bad decision. Nowhere else can you get an immediate 100% return on your investment. Many employers will match 3-5% of what you put in. Some will match you dollar for dollar. Over time that free money could make a huge difference in retirement.
Think about your personal financial situation as you read through the items listed above. Consider which habits are having a negative impact on your financial bottom line. Resolve to eliminate them immediately! Accumulating great wealth will take time, so it’s imperative to start as soon as you possibly can. Fight bad habits with everything you’ve got and you’ll be able to watch your monetary success grow year after year.