Good financial habits don’t just happen. Like washboard abs, most people have to work to develop them.
Racking up monthly charges on your credit cards without paying off the balance is a common bad financial habit. Not reviewing credit card statements is another.
But other, more subtle behaviors can be tipoffs to a disorganized financial life.
Getting caught with a late fee because you lost or forgot about a bill points to a too-loose approach to finances. Avoiding financial decisions because you don’t know enough is another warning bell.
Sometimes an otherwise good financial decision – such as making extra mortgage payments – doesn’t make sense at a specific time. For people with student or credit card debt, for instance, that extra mortgage payment may not be a great choice..
Five habits you may think are no big deal can, in fact, make a difference when you want to accomplish financial goals.
You don’t have a budget
It may feel old-fashioned, but a budget is essential. Know that, even with a budget, you can still leak money. Gym memberships with hidden cancellation clauses and free trials that require credit card info are examples. Make sure these don’t turn into unwanted paid subscriptions.
A budget can prevent you getting too far off track. If you regularly review expenses, you’ll see that something may be an actual problem and not just a onetime occurrence. Get in the habit of consistent tracking. You’ll know there’s a problem if your bank balance is dipping rather than rising at the end of the month.
You shop without a list
Spur-of-the-moment purchases are just one way to shop unthinkingly. When it comes to essential and recurring services such as cell phones, internet and cable, you need to compare prices and look for deals.
Make lists and do your due diligence to make sure you don’t spend more than necessary and possibly more than you have — whether it’s for a suit or a service billed monthly. Check Consumer Reports and comparison websites, or talk over decisions with a knowledgeable friend who has already done the research.
You use a credit card daily
If credit card debt is starting to mount, you may want to take a second look at how you use cards. Don’t accumulate debt on everyday expenses. For groceries, gas money, daily purchases and the like, stick to a debit card. The money comes right out of your checking account, so you must limit spending to what’s available. You also won’t accrue any interest charges or late fees.
Your finances are a forbidden topic
While not necessarily a bad habit, staying silent on financial matters may hurt you rather than help you. The way to become confident financially and reach your goals is to be willing to learn — and that means learning from your mistakes. Read books and articles and talk to a financial advisor who can lead you in the right direction, Your money is too important not to talk about.
Your head is in the clouds.
You are oblivious to your finances. You don’t know your credit score. You don’t know all your company’s benefits. If your company offers a 401(k) plan and you’re not participating, you’re in denial about the fact that you’ll want to retire someday but you won’t have saved enough. Or you are saving through the 401(k), but you’re not saving enough to get the company match. Does your company offer a health savings plan paired with high-deductible health insurance? If so, it’s wise to take advantage of it.