The problem with habits is that they come naturally to us and can be hard to break unless we really make an effort. Sometimes we do things without even thinking, to our own detriment. If you feel like you are having money trouble when you shouldn’t, perhaps you need to take a look at your spending habits. Assess what your bad money practices are and how you can avoid them and start saving. We’ll break down some of the most common bad spending habits and how you can deal with them.
1. Spending More Than You Earn
One of the most problematic bad spending habits is spending more than you earn. According to one recent survey, 60% of the U.S. adult population is in this situation. This habit can spread to all areas of your personal finances and negatively impact your entire life. Relying on credit to cover expenses you can’t afford is a slippery slope. With credit comes interest. If you can’t afford something when you purchase it, the chance of being able to pay it plus interest is even lower. Before addressing other money problems you might have, you need to start living within your means. Things may need to do to curb spending might include cutting back on buying cups of coffee or not going out for lunch.
2. Late Bill Payments
Paying your bills late is another common bad habit. Even the most money savvy people can miss a payment. Missing a payment on occasion is not a big deal, but making it a common occurrence can really hurt you. Damage to your credit score and compounding interest and late fees are all negative affects you can easily avoid. If you find you have trouble remembering to pay your bills or tend to procrastinate, setting up auto-pay is one good solution.
3. Out of Network ATM Usage
When you use an ATM that does not belong to your financial institution, you typically pay a fee. It might not seem like much, but if you make a habit out of using out of network ATMs, that money adds up. You could save a couple hundred dollars a year by only taking money out of ATMs in your network. For example, if you belong to Chase Bank, only use Chase ATMs and take out enough money that you won’t need to go to the ATM several times a week. There are also some stores, such as Wawa and Quick Chek, that have surcharge-free ATMs.
4. Not Creating a Budget
Not keeping track of your income and your expenses is a recipe for disaster. Spending money without having a plan can cause you to come up short on your important monthly payments. Once you have created a budget, it becomes much easier to track your spending. Most people have a set amount of big monthly expenses such as rent/mortgage, phone bill, car payment, insurance, etc. When you know you have the money for those things, you can start setting some of it aside and using the rest on yourself. It is okay to spend money on some things you “want” and don’t necessarily “need”. You just need to make sure you don’t go overboard. Using a budget tracker is an easy way to stay current with your spending.
Need Help in Dealing With Your Bad Spending Habits?
For a lot of people, it isn’t a matter of breaking just one of these habits, but breaking many or all of them. That can be overwhelming. The money coaches at The Alexandrite Group are prepared to help you get your financial situation to a stable place and help you start saving for your future. Contact us today to set up a consultation.