Have you come to the end of the money and it is not time for your paycheck yet? Is this a recurring problem in your life? If so, it may not be about needing more money to live on. It could be about habits you have developed that are keeping you in the poor house.
I find one of the most motivating ways to get on the ball financially is to make a list of life goals. Do want to own a home? Take your children to Disney World? Live the life of your dreams? Jot a few things down on paper.
There are steps you can take to work towards these goals. Eliminating the things that are keeping you broke is a task you can start TODAY! Here are 8 bad money habits that begin working changing immediately.
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1. Improper Use Of Credit Cards
Credit cards are great. You walk into the store hand the clerk a piece of plastic and walk out with the latest fashions, vacation, home décor or whatever. And the feeling that follows is uplifting.
Then 2 weeks later the bill comes and suddenly, you are looking a week or maybe even a month or more of your salary in front of you on a credit card statement.
Credit card debt can be debilitating, and it can steal your dreams. Credit cards should only carry a balance if it is a dire emergency. And really, emergencies should be planned for with the building of an emergency fund.
And just because it is 0% does not mean it is okay, you still have a payment each month. I know people that rack up thousands of dollars of debt in a short amount of time at 0% interest. That interest rate does not last indefinitely.
Credit cards should be paid on time and in full each month. Once this behavior has become a habit, credit cards can be used to accumulate airline miles and cashback rewards among other rewards.
2. Failure to Build an Adequate Emergency Fund
Emergencies can happen at any time and in most cases, there is no warning. Becoming unemployed, medical emergencies and a major car or home repair are just a few of the occurrences that can cost you thousands of dollars.
If you are not prepared, you will be carrying a large balance on a high interest credit card for a long time or worse.
Even a small amount added to savings each week/month will get you farther than nothing when an emergency happens. The best way to keep your emergency fund from tempting you is to set it up so that it is not at your primary bank.
3. Making Impulse Purchases
Impulse purchases are rarely for items that are needed. Impulse buys are often about the feeling of exhilaration that comes along with the material possession.
This feeling quickly passes and then you are left with a feeling of remorse and either a credit card bill or an empty bank account.
If you think you need it…wait. If you wait a few weeks and you still feel like you need to make the purchase, then maybe you do need the item. Evaluate your purchase carefully and consider the benefits and consequences of making the purchase.
4. Paying Bills Late
Paying bills late cannot only ruin your credit, it can be very costly. Credit card companies make a lot of money from charging later fees. Late fees can vary from $35 to $50 depending on the credit card company.
And if that late fee puts you over your credit limit, you can expect another fee of $35 to $50 for exceeding your limit. Credit cards do not have a grace period. Your payment is expected in their office on or before the due date listed on your statement.
If you make your payments late habitually, you may find yourself paying a shockingly high interest rate.
Get in the habit of making payments at least 7 days before they are due. I would recommend make credit card payments online.
Having worked for a credit card company previously, I had never seen an online payment get “lost” and they usually post to your account within 24 hours of making the payment.
5. Buying Items You Don’t Need
A person needs shelter, clothing, food and medical care. Now, that isn’t to say that those are the only things you should buy, but many people spend money that could be spent more wisely or saved.
Periodically review your spending to see where you can cut expenses that may be excessive.
6. Not Saving Regularly
If you struggle to make ends meet, you may wonder where you are going to get the money to save. Start small…if you can come up with $25 a week, this will get you to $1300 in a years’ time.
Start out with a small amount and increase the amount over time. Challenge yourself to find ways to cut your expenses and bank the extra cash. Get your family involved and make a game out of saving. You will be surprised at what you can accomplish.
7. Not Saving for Retirement
You may think you have many years to save for retirement and that may be true. But the longer you wait to start, the harder it will be get to the amount it takes to live comfortably without a job.
If you think you can start 10 years before you plan to stop working, you will find yourself facing an uphill battle. It is never too late to start. Pick a retirement savings option and start contributing.
8. Not Talking About Money
It is becoming more common to talk about money, but for many years it has always been taboo to talk about your salary, expenses and debt.
I am not saying it is necessary to discuss these things on social media, but you can benefit by being open about debt and expenses with family and sometimes friends. Talking about debt can start you down the path to dealing with it.
A support system is the first step to getting things in your life back on track.
Having a healthy bank account is as much about mindset as is about changing your habits. One of the things that allowed me to make the changes to pay off debt and start saving was having a healthy obsession with financial freedom.
Since I don’t pay bills late and I have an emergency fund and contribute to retirement, my major focus is on reducing spending and saving more.
A Final Note…
If you see yourself in the above list, it might be time to start making some changes. Some of these suggestions can be implemented immediately and are simple. Pick one of the above and start putting it into practice.
In another month pick another item or two and begin following those tips for improving your finances. Start making at least some of these changes and you will feel less stress and more sense of achievement. What are you waiting for?