Regarding financial bad habits, we’ve all heard the same old advice – don’t spend too much, stay away from crazy debt, and avoid living paycheck to paycheck. But here’s the thing: sometimes, even when we follow all those tips, we still await progress. It feels like we’re on a hamster wheel going the wrong way. Well, fear not! I’ve got five often overlooked financial bad habits that might just be draining your bank account.
Engaging in Emotional Spending
Almost 9 out of 10 Americans have fallen into the trap of emotional spending at some point, and this number has only gone up since the pandemic hit.1 Many people shop to cope with stress, sadness, and guilt. It’s like our emotions are playing a mean trick on us, leading us straight into the arms of impulse purchases and excessive credit card debt. Talk about a mean trick!
We can work on putting a stop to this emotional spending madness. The first step is to be aware of our emotional triggers. So, what emotions make you reach for your wallet? Is it stress, sadness, or guilt? Once we know what gets us in that spending mood, we can start finding healthier outlets for our feelings. Going for a walk, listening to music, or talking to a friend can help us feel better without draining our bank accounts. Let’s find a healthier way to deal with our emotional turmoil.
Here’s a little trick that can make a difference: give yourself a 24-hour cool-down before making any big or unplanned purchases, even if they’re small. Think of it as hitting the pause button on your spending spree. Trust me, that bit of time can work wonders. It lets you step back, take a breath, and consider whether that purchase is worth it. Sometimes, you might find that waiting a day makes you realize you didn’t need that shiny new toy.
Ignoring Small Expenses
Ah, those pesky little expenses – they have a sneaky way of slipping through our fingers, don’t they? Five dollars here, ten bucks there, and before you know it, your wallet feels slim. But we have the secret weapon to tame those expenses and put you back in control.
The first step is simple: awareness. You’ve got to know where your money is going, even when those small expenses seem innocent. Take a closer look at your daily coffee runs, subscriptions, and gas station snacks. Who can blame you for occasionally having your lunch delivered when life gets hectic? But here’s the thing – when you’re aware of these spending habits, you can decide what’s worth it and what makes you feel queasy. It’s all about being intentional and purposeful with your money.
Now, brace yourself for the dreaded “B” word – budgeting. It doesn’t sound like the most thrilling thing in the world, but budgets are the superheroes of money management. They empower you, reduce money stress, and build strong financial habits. Budgeting is like creating a financial roadmap, helping yourself prioritize and make more intelligent choices.
Neglecting Your Financial Education
Not many people get a proper financial education in school or from their parents. And that leaves us feeling lost when handling money. That’s why having a foundation of basic financial skills is so important. I’m talking about things like budgeting, investing, and debt management. These skills can help you make informed choices and avoid those long-term consequences that no one wants.
The good news is that plenty of resources are available to help you gain a financial education. I’m talking about books, workshops, online courses, you name it. However, it can be overwhelming to sift through all that information and figure out what’s relevant to you.
That’s where a trusted and experienced wealth advisor comes in. They can be your guiding light in finance, helping you navigate all that financial jargon and find what truly matters for your unique situation. Think of them as your very own map app on this financial journey. They’ll keep you informed, help you monitor your situation, and make adjustments as you learn and grow.
So whether you dive into financial books, attend workshops, or enlist the help of a wealth advisor, the important thing is to start building that financial education. Remember, you’re not alone on this journey. You’ll be pursuing financial success quickly with the proper knowledge and guidance.
Procrastinating About Retirement Savings
Putting off retirement savings is pretty tempting. Who wants to think about something so far in the future? But the earlier you start saving and investing for retirement, the more you can benefit from the tremendous power of compound interest.
Think of compound interest like a snowball rolling down a hill. It starts small, but as it keeps rolling, it gets bigger and bigger, gathering more snow. In this case, that snowball is your retirement savings, and the longer it has to grow, the more money you may have when you’re ready to enjoy your golden years.
If you keep hitting snooze on your retirement savings, that might lead you down a bumpy road. Let me break it down for you: the longer you procrastinate, the more you’ll have to save later in life to catch up. Even if you try to make up for lost time by taking on riskier investments, you still might be unable to make up for those missed years of compounding returns. And we don’t want that.
Here’s my friendly advice: don’t fall into the trap of retirement savings procrastination. Start now, even if it’s just a tiny amount. Every dollar you put away today has the potential to grow and work its magic over time. And hey, it’s never too early to start thinking about your financial future.
Frequent, Unplanned Borrowing
Relying on credit cards, payday loans, or other high-interest borrowing for everyday expenses is dangerous. Those interest charges can pile up quickly, creating a debt spiral that’s tough to escape. But you can take control of your finances and break free from harmful borrowing habits.
Start by creating a budget to see where your money is going and avoid overspending. Look for areas where you can cut back to pay down debt quicker. Next, build an emergency fund to handle unexpected expenses without using high-interest loans.
Our mission is to identify goals and nurture behaviors so that we can confidently discover and pursue dreams together. If you’re looking for financial guidance, schedule a call today.
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.
All information is believed to be from reliable sources; however, LPL Financial and Enduring Wealth Advisors® makes no representation as to its completeness or accuracy.
Securities are offered through LPL Financial, Member FINRA/SIPC. Investment advice is offered through Enduring Wealth Advisors, LLC, a registered investment advisor. Enduring Wealth Advisors, LLC and Enduring Wealth Advisors, INC are separate entities from LPL Financial.
This article was prepared by WriterAccess.
Edited by Mark R Tracy, MBA, CFP® from Enduring Wealth Advisors® in collaboration with Copy.ai and Grammarly
1 Americans’ Mental Health and Personal Spending Report 2023
https://www.self.inc/info/mental-health-personal-spending-report/
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