Bad financial habits die hard and breaking them takes time and effort. Avoiding these four faux pas can make all the difference.
Everyone has some bad habits, it can't be helped. What can be helped is making sure those bad habits don't take over and pile up on your finances over time.
As we travel through our lives our habits accrue slowly, often without us even noticing. The good ones are invaluable, and often come as the result of good decision making. But the bad ones — let’s face it, we all have them – can really set us back. Our habits – both good and bad – have their way of creeping into our financial lives, for better or worse. Here are some of the most common bad financial habits and how to avoid them.
Paying your bills after the due date
We all know that “Life Happens,” so sometimes paying bills late is unavoidable. But it becomes a problem when we make it a consistent habit. With today’s technology, we can really limit the occasions when we might have to pay a bill after it’s due. Apps and websites allow us to automate payments, and we can also set up reminders on our phones or online calendars, so we know what day we have to pay our bills. Also, consider paying your bills ahead of time. Paying your credit card as you go or paying off a loan up front saves you the headaches of interest payments, all while allowing you to earn valuable credit.
In the era of one-click shopping, impulse buying has never been easier. While infrequent “retail therapy” can be deeply satisfying, the more often it happens, the more likely we are to put our financial health in jeopardy.
Consider the 30 day rule: Bookmark the item that you want in that moment and then wait 30 days before you revisit your potential purchase. If you still have the same want, then go for it. But once you sit on an impulse for a while, your feelings might change. If you budget your funds, you’ll also have a better understanding of how an impulse purchase can impact the money you’ve allotted for essential items like groceries or healthcare.
Not keeping track of your debt
Debt isn’t fun. In fact, for many of us, thinking about our debt might induce a sense of anxiety or panic. This can be especially true for dentists, who have one of the highest debt to income ratios. Ignoring the looming debt might make us feel better in the short term, but in the long term it can take a serious toll on our financial health.
Take on your debt in small steps. Break up your loans into manageable monthly payments. If you can see a finish line, no matter how far out, you’ll feel more confident knowing there’s an end to the anxiety-ridden process.
Putting off retirement savings
This is another bad habit that’s easy to fall victim to. “Retirement is so far away!” we say, until the day it isn’t. It’s tempting to use your wealth in the here and now, but keeping an eye on the future is just as important. First, decide how you want to live in retirement. Do you want to travel the world in endless vacations now that you have time? Or is a lean retirement more your style? Well, you’re going to need money for both options, so get started today.
Make sure you’re set up with an IRA or 401k, some sort of forced retirement savings that will make sure you have money squirrelled away that will grow over time. You should also include retirement savings into your budget and overall financial plan, freeing you from worries about expenditures that might tank your retirement funds. A basic map to work with will allow you the space to focus on the present and keep your future intact.
Financial health is often as much a factor of your personal habits and behaviors as physical health. If you can avoid these four financial faux pas, you’ll be in good shape.