Developing good habits helps us focus on things that need our attention most.
But as you work to get your financial life on track, you’ll probably find old, counterproductive habits undermining your progress. Some of them worked once, but now they’re holding you back. Others have always been bad.
Dropping bad money habits makes it easier to power up your financial life. Following are 10 bad money habits, and tips for ending them.
1. Carrying a credit card balance
Carrying a balance on a credit card is like walking down the street with a hole in your wallet and letting money leak out.
Here’s why: Suppose you are paying down a $5,000 balance on a card charging 15 percent interest. If you only pay the minimum amount each month, it’ll take decades to pay off the debt and cost you thousands of dollars in interest.
Build a better habit: Devote every spare penny to getting rid of credit card debt. If you have other pressing debts, make a plan for dealing with all of them. For more tips, check out “Resolutions 2019: Crush Your Debt in 3 Simple Steps.”
Keep the balance from building again by making a new habit of paying off the entire bill every month — no exceptions ever.
2. Failing to fund a retirement plan
There are compelling excuses for putting off saving for retirement. But none of those excuses will matter if you reach retirement age with little saved. And, if you don’t take advantage of your employer’s matching contributions, you’re passing up free money every month.
Build a better habit: Imagine yourself at age 70 or 80. Picture concrete details — how you look, where you are, how you’re spending time and who is with you. The more real your future self is to you, the more likely you are to care for her or him today.
Start paying close attention to your retirement savings. If you can’t significantly increase the monthly contribution you make to your plan immediately, increase it by 1 percent a month. Once a year, check the performance of your investments and rebalance your portfolio.
3. Not shopping for monthly services
Hopefully, you comparison shopped before signing up for insurance policies. And we trust you did the same thing with phone, internet and cable services.
But you might be missing savings if you’re not checking prices again every year.
Build a better habit: Put some energy into improving your financial life. Once a year, spend 30 to 60 minutes price shopping for monthly services. To make it easy, keep a list with each company’s name, your account number and your monthly payment amount.
4. Paying for cable or a landline phone
Cable prices are going nowhere but up. Free and cheaper alternatives make experimenting worthwhile. But will you get out of your rut and try something new?
Build a better habit: Before trying a change, record your viewing habits for a week or two to see how and if you’re using the services you currently have.
Ditto for your landline. If you’re able, drop the landline and use mobile phones only. If that seems too radical, refrain from using the service for one month — or even just a week — while you check out alternatives.
- Drop the premium cable tiers; learn to love basic.
- Find out if you’ll pay less by bundling internet and phone services with one company.
- Get an all-inclusive mobile plan with unlimited text, data and phone.
- Switch to Skype, Vonage or another cheap or free internet phone service. Don’t fear the new technology. It’s easy to use.
- Cut the cable and substitute sources like YouTube, Hulu, Netflix, Redbox and DVDs from the public library.
5. Ignoring coupons and deal sites
If you aren’t using coupons and checking daily deal sites, you’re spending too much. However, you still need to exercise discipline when bargain shopping so you don’t sabotage your good intentions with impulse buys.
Build a better habit: Tackle bad habits in small bites. Try just one deal or coupon site. Money Talks News’ deals page, for example, has new sales and coupons every day relating to clothes, shoes, electronics, tools and more.
Or try one of these:
- Explore grocery store apps that deliver coupons and personalized savings to your computer or smartphone.
- Look for printed coupons on grocery store receipts.
- Stop by manufacturers’ websites and look for coupons. Or, stop by Coupons.com.
6. Playing investing too safe
Safe investing is important. But there’s safe, and then there’s too safe. Keeping all your money in no-risk accounts means inflation will rob you of spending power slowly but surely.
Build a new habit: Don’t break all your bad habits at once. Pick one and focus. For instance, make managing your investments a priority. Learn your investing style by taking an online risk-tolerance quiz. Next, read up on the basics of investing. Then — taking your age and risk tolerance into account — take another look at your investments.
Money Talks News founder Stacy Johnson offers some tips in “Ask Stacy — How Do I Invest in a Mutual Fund?“