I shared a meme on Facebook. The caption read, “I finally found the person who’s been spending all of my money.” The image was a lady with her hand in a chokehold position. The person who was being choked was the same lady’s shadow reflection of herself. Yep! When it comes to money management, we are the CFO (Chief Financial Officer) of our money. We reaped the rewards and good fortune that comes from managing our money wisely. But we suffer through the agony and consequences that come from doing dumb (expletive) with our money.
We’ve all done stupid things with our money. Each and every one of us has a story to tell. I’ve made some money decisions in my life that worked out well. When I made good money decisions, I felt like I was walking around with a “S” on my chest. I felt like Superman! When I made bad money decisions, I felt like I was walking around with an “S” on my forehead. I felt like a “Sucker.”
Everyone dreams of financial stability, financial freedom and financial independence, but often, it’s our own bad habits and bad decisions that keep us from reaching our financial goals. Whether it’s splurging on unneeded luxuries, buying things we can’t afford, keeping up with the Joneses, or neglecting to save and invest, bad money habits can seriously hinder our economic stability and financial well-being. Here’s a list of the top 32 bad money habits we need to break to improve our financial health.
Not Setting Financial Goals: Without clear financial goals, it’s challenging to track progress and make informed financial decisions. Having clear-cut goals makes the sacrifices you make to accomplish your goals worthwhile.
Ignoring Financial Education: Not educating yourself about personal finance can lead to poor money management decisions.
Not Having a Budget: Failing to create and stick to a budget can lead to overspending and financial instability. A budget only has one rule: Don’t go over budget!
Not Tracking Expenses: If you can’t measure it, you can’t manage it. Failing to monitor your spending makes it challenging to identify areas where you can save money.
Living Beyond Your Means: Spending more than you earn can lead to debt and financial stress. Act your wage!
Impulse Buying: Making unplanned purchases can drain your finances and prevent you from reaching your financial goals.
Frequent Dining Out: Dining out regularly adds up quickly and can strain your budget.
Relying on Credit Cards: Overusing credit cards without a plan to pay off the balance can result in high-interest charges and debt. It’s true, plastic can smother you!
Ignoring Debts: Ignoring debt doesn’t make it go away; it makes things worse. Neglecting to pay off debts can result in accumulating interest and negatively impact your credit score. Prioritize debt repayment, and pay them off as soon as humanly possible. Debt is hazardous to your wealth.
Making Minimum Payments: Paying only the minimum on credit cards or loans can extend your debt repayment period and amount due significantly due to interest. Make minimum payments, pay maximum interest.
Not Comparison Shopping: Failing to compare prices before making purchases can result in overspending.
Keeping Subscriptions You Don’t Use: Paying for unused subscriptions wastes money that could be saved or invested elsewhere.
Chasing Trends and Fads: Constantly buying trendy or fashionable items can lead to unnecessary expenses.
Ignoring Coupons and Discounts: Passing up opportunities to save money through discounts and coupons can add up over time.
Paying for Convenience: Opting for convenience over cost-effective solutions can result in overspending.
Neglecting to Plan for Major Expenses: Failing to save for significant expenses like home repairs or car maintenance can disrupt your budget.
Ignoring Small Expenses: Small expenses add up. Track all your spending, however minor, to see where your money really goes and to identify potential savings areas.
Overspending for Car: Paying too much for a car can drive you broke.
Overpaying for Housing: Renting or buying a home that exceeds your budget can strain your finances.
Keeping Up with the Joneses: Trying to match the spending habits of others can lead to financial insecurity. Who are the Joneses? The Joneses are an illusionary model of success.
Lifestyle Inflation aka Lifestyle Creep: Increasing your spending as soon as your income increases can prevent wealth-building. Continue to live modestly even as your financial situation improves.
Falling for Sales and Marketing Tactics: They’re out to get you! Who are they? The marketing geniuses of the world who are seeking to extract money from your pockets into theirs. Being swayed by sales tactics and marketing ploys can result in unnecessary purchases.
Lending Money Without a Plan: Loaning money without clear terms or repayment agreements can strain relationships and finances. Here’s a tip, don’t lend money to friends and family.
Not Saving for Emergencies: Lacking an emergency fund can leave you vulnerable to unexpected expenses and financial hardships.
Ignoring Retirement Savings: Your retirement savings is your future paycheck. Delaying or neglecting to save for retirement can jeopardize your financial future.
Impulse Investing: Making hasty investment decisions without proper research and planning can lead to financial losses.
Procrastinating Investments: Delaying investing can hinder your ability to build wealth over time.
Gambling or Risky Investments: Engaging in high-risk investments or gambling can result in substantial financial losses.
Not Checking Your Bank Statements: Regularly review your bank statements to spot any errors or fraudulent transactions quickly.
Neglecting Insurance Coverage: Skipping essential insurance policies can leave you vulnerable to significant financial losses in case of emergencies.
Avoiding Financial Reviews: Not reviewing your financial status periodically can prevent you from making necessary adjustments to meet your financial goals.
Not Seeking Professional Financial Advice: Avoiding advice from financial experts can result in missed opportunities for financial growth.
Breaking these bad habits isn’t just about saving money, it’s about establishing a healthier relationship with your finances. Each step you take towards breaking a bad money habit can significantly improve your financial future. Remember, the goal is to gain control over your finances rather than letting them control you. Start today, and you’ll thank yourself tomorrow.
(Damon Carr, Money Coach can be reached at 412-216-1013 or visit his website at www.damonmoneycoach.com)
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