While we may have goals to build a solid emergency fund, buy a home, retire early, or pay off debt, sometimes we can be our own worst enemy. Let’s face it — we all make poor money choices. Sometimes we may even be sabotaging our finances unconsciously. We are only human, after all.
Breaking those bad financial habits can get us closer to meeting our goals.
Here are a few to avoid:
- Letting groceries go to waste because you picked up takeout on the way home.
When you are hungry and tired after a long day at work, it is tempting to pick up food on the way rather than taking the time to cook.
Financial Planner tip: Plan meals ahead with a weekly system. Add “take out” to the meal plan on certain days when you know you won’t want to cook. Set up the slow cooker or make extra meals and freeze them to make weeknight dinners easy.
- Deluding yourself that you’ll eat leftovers.
Have you ever carefully packaged your leftovers, knowing deep inside you won’t eat them?
Financial Planner tip: Own up to the fact that you don’t like to eat last night’s dinner for lunch the next day. Make smaller portions instead.
- Telling yourself, “I deserve this purchase.”
While you certainly can reward yourself for hard work, you need to ask yourself if the treat is something you can afford. Have you saved up for it over time, or did you build the expense into your budget? If so, pat yourself on the back and enjoy. If not, consider a different reward.
Financial Planner tip: Choose to reward yourself for accomplishments in ways that are fulfilling and affordable.
- Losing receipts.
When tax time rolls around, you’ll need copies of receipts to substantiate the expenses you claim. Some people simply throw receipts away or keep them in random spots around their home or office. This means they could be throwing away a substantial amount in write offs.
Financial Planner tip: Keep a file or envelope for important receipts. Put it in an accessible spot, and when you pay your car registration, a medical bill, or a give a charitable gift, put the receipt in the envelope for safekeeping.
- Shopping to increase happiness.
Even if “retail therapy” lifts shoppers’ spirits, it is fraught with the danger of overspending.
Financial Planner tip: Set aside funds for a “spending account” and link a debit card to it. These funds can be designated for your retail therapy, or whatever you’d like to spend them on. Once the money is spent, save up for your next therapy session!
- Ignoring your bank statements.
Now that we are all going paperless, it’s easier to ignore our financial statements. There may be sneaky recurring charges for items you no longer use, or charges that are incorrect and need to be disputed with your credit card company.
Financial Planner tip: Review your financial statements for recurring expenses. Ask yourself if you use the services you are paying for. If not, drop them. When you see an item you don’t recognize, dispute it.
- Comparing yourself to others.
Unless you are in the same position, you can’t know what someone else can afford or not. You don’t know if they got an inheritance, made good investment choices, and/or scrimped and saved for years to buy a special car or the home of their dreams. You also can’t know if they are stretched way beyond their means and are having trouble making payments.
Financial Planner tip: Making a financial comparison between yourself and someone else just isn’t realistic, so don’t waste your time or energy doing it.
We all have bad money habits, as well as good ones that serve us well. Trim off a few of the bad ones and develop more good ones. You’ll be happy you did.