We all have a few bad habits, some are worse than others but undoubtedly we’ve got a few that aren’t all that bad that we could get rid of. Some of these bad habits are probably bad financial habits, i know that I have a few of those. Since starting my weekly budget I’ve come realize just how pronounced these bad habits are. Granted they’re not costing me tens of thousands of dollars but they’re still costing me money.
Knowing what your bad habits are is the first step to getting rid of them. Taking a good hard look at your expenses and your spending habits can point out a few obvious bad habits. Bad financial habits range all over the map and can include:
- Paying extra ATM fees for convenience
- Unnecessary bank fees
- Using credit when we don’t need to
- Poor planning and spending to compensate
- Splurge or spontaneous spending
- Paying late fees regularly
Breaking our bad financial habits can be easy. First off start by understanding what they are and when you do them. If you know you’re going to need cash on hand for something plan ahead and make sure you use your own bank for it rather than an ATM that will ding you $2 or $3 for the convenience. Its as simple as that. Most of the time the small extras that we’re paying because we can’t be bothered or don’t even know we’re doing it add up.
For example if you pay one late fee a month(say $10) and pay one ATM fee a week($2) can add up to a whopping $276. If you were going to throw that kind of money out in one lump sum you’d notice but the small bad habits we’ve fallen into make us disregard it.
When you’re getting out of your bad habits it helps to set up small goals. In my particular case I have a bad habit of going out for lunch all the time. I know I don’t need to but I enjoy it and most of the time I don’t think about it. Rather than trying to stop all at once which I would notice (because I enjoy getting out of the office for a bit) I cut back. By bringing my lunch even 2 times a week reduces the amount by close to $20 a week (or close to $1040 per year). When I get used to this I’ll increase the amount to only eating out 2 times and then down to 1; the difference will make an impact on my bottom line and breaking the bad habit doesn’t take too much effort.
Most of the bad habits I’ve mentioned so far are a means to cut back on spending and expenses but the same holds true for savings. If we only set money aside once in a while we don’t really take advantage of compound interest nor do we build up an emergency fund quickly. Breaking out of these bad habits can really start showing a huge impact very quickly.
What bad financial habits do you have? What do you do to combat them?