Money habits and spending patterns are often learned over time. That means your relationship and attitude toward money in the past can influence current and future financial decisions. So if you're often drowning in debt, failing to stick to a budget or spending rather than saving, you may need to shift the way you think about money and cultivate new habits to achieve financial security and freedom.
With that in mind, if you want to ditch poor money mindsets and ensure you're not sabotaging your financial health, brush up on the following behaviors and learn expert-backed pointers for correcting them.
Here are seven behaviors that threaten your financial security:
-- You neglect to budget for one-time expenses.
-- You overspend on purchases you don't need.
-- You haven't established a concrete money plan.
-- You make impulse purchases.
-- You don't keep track of your spending.
-- You delay saving.
-- You dig yourself deeper into debt.
You Neglect to Budget for One-Time Expenses
Creating a monthly budget is critical to monitoring your income and typical expenses to keep track of your finances and eliminate unnecessary spending. But creating a well-rounded budget means factoring in costs beyond regular fixed monthly bills, such as your mortgage and car payments, as well as variable expenses, including groceries and gas.
Julie Fletcher McDaniel, a certified financial planner and partner at IMPACTfolio LLC, a financial planning firm in Denver, says that one-time expenses can trip you up if you don't keep track of them. She highlights annual expenses such as her car registration, car repairs, insurance premiums, home repairs, homeowner association assessment, child care costs, child sports, ski passes, travel, out-of-pocket medical expenses and the price of financially assisting family members as examples. "The list is endless," she says.
McDaniel encourages clients to look at their annual budget instead of only their monthly expenses "to try and capture all these one-time costs that really aren't one-time at all" when determining how much money to allocate per month.
You Overspend on Purchases You Don't Need
While it's easy to talk yourself out of impulse purchases, it can be more challenging to turn down family members, friends and neighbors, McDaniel says. "It can cause hard feelings to say no to an invitation for an expensive vacation, expensive restaurant or expensive weekend activity," she explains.
But if you can't afford to go on a costly vacation with your sibling's family or a fine dining restaurant with your friends, for your bank account's sake, you need to learn how to politely decline -- or come up with a less pricey compromise.
You Haven't Established a Concrete Money Plan
Planning for the future and outlining key financial steps to stay on track is paramount for success. If you aren't tracking or prioritizing long-term goals, building an emergency fund or budgeting for success, you could be sabotaging your money goals. Dan Pallesen, a financial advisor and psychologist in Chandler, Arizona, describes this type of spending as mindlessness.
"In my experience, the No. 1 and most dangerous saboteur of financial well-being is mindlessness. This can come in many forms. At its most basic form, mindlessness can simply mean forgetting to cancel the gym membership after you move and a credit card you don't monitor gets charged for the next year," he says.
However, mindlessness can have worse outcomes. For example, consumers may find themselves spending to keep up with the Joneses instead of considering the impact their spending has on their future. "Some quick soul-searching can make you aware of your values and your goals," Pallesen says. "And when you align your saving and spending patterns with your values, you will quickly find yourself on the road to financial success, as best defined by you."
You Make Impulse Purchases
Of course spending money on big-ticket items you can't afford can set you back financially. But a lot of consumers end up in a pattern of chasing credit card rewards by buying things that aren't within their means, says Ben Watson, a certified public accountant who owns Fiscal Fluency, a personal finance and business coaching company in Paducah, Kentucky, and serves as the chief financial officer of the personal finance blog DollarSprout.com.
"Some credit cards have awesome rewards," Watson says. "Double cashback, bonus air miles and gift card promos. But often people chase the rewards and fall into the trap of paying more for unnecessary things just to get the reward. I see lots of clients who have tons of air miles but can't pay off their credit card every month."
He points out that if you collect thousands of frequent flyer miles for a vacation that cost you $3,000 (and will take you a long time to pay off), you really aren't gaining rewards or doing your finances any favors. The same can be said for consumers looking to seize upon discounts by buying products on sale on a whim. Remember: If you buy something you don't need to save money, you aren't really saving money.
You Don't Keep Track of Your Spending
Watson describes the process of believing you're monitoring your expenses -- when, in reality, you are not -- as "mental accounting." People will go out for an evening, thinking they're spending $100, but it's actually closer to $250, he says. People forget to factor in the price of Uber rides, an extra tip at dinner and picking up ice cream on the way home, he explains.
That type of budgeting -- or not budgeting -- can be why so many people find themselves short on cash at the end of a pay cycle. To combat this, you may want to try some budgeting tools and apps that you can use on your phone or desktop, such as Mint or Goodbudget. At the very least, you should check your bank balance and credit card expenses frequently to monitor your spending habits.
You Delay Saving
This is a big problem for many people, says Denise Nostrom, founder and owner of Diversified Financial Solutions in Medford, New York. "People always feel that they have the time to save and why do it now, when they can start later. This is a big mistake because the earlier you start, the better you are and with potentially better results," she says.
Nostrom says that a smart strategy is paying yourself first. "Make sure you allocate a portion of your income to your 401(k) plan, Roth IRA, cash reserve or other investments before you do anything else. This forced savings will enable you to build your investment and retirement savings," she says, adding: "Even if you do not have a lot to start today, start anyway. Your future self will thank you."
You Dig Yourself Deeper Into Debt
This is a classic problem for many people who struggle with money. Having to pay off debt, especially when you're broke, can really complicate your financial future. If you're saddled with debt and you keep spending money, such as making purchases with a credit card that you won't be able to immediately pay off, you're going to find that you have less cash to put away for your retirement, emergency savings and extras, such as a vacation. Until you solve this problem by shifting your strategy, you're going to create a lot of financial problems.
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