21 Jan Seven Bad Money Habits To Stop Right Now

I do a lot of budget reviews with people. I talk to a LOT of people about money when I travel for my job. It surprises me how open and intraspective people are about their financial status. Money can be a sensitive topic of conversation. I don’t believe it should be as long as its in a constructive context.

That being said, I have noticed a lot of trends with the people I talk to and the things I read. We are human and we fall into routines and habits. We have to be purposeful to develop our own habits or someone else will develop them for us, and those usually aren’t good habits. So I’ve come up with a list of some “bad habits” that you can change right now!

That being said, LET’S GET TO THE MONEY!!!

1) Not Having A Budget

Seriously, this is the most-common, easily-fixable, largest-impacting thing you can do in literally an hour or two in order to change your entire life. And when I say budget, this is what I mean…

• It’s on paper, excel or online tracker you can easily access
• You created/reviewed it in the past 6 months
• Spend time reviewing how you track against it atleast once a month
• You actually ARE following it and not consistently going over budget

Almost no one admits at first that they don’t have a budget. That’s why I have to get specific. “I mean, I know what I’m spending” or “I track it in my head” or “I review my credit card statements and bank statements around once a month” are things I’ll hear regularly. These are not budgets. They are excuses and forms of denial. Why do I say that? Because I wouldn’t have to dig in order to find out. People would just be up front and go, “No, I don’t have a budget.” If you aren’t honest with me, then you definitely aren’t being honest with yourself.

Here’s the statistic. Only 41% of Americans use a budget according to a US Bank poll. Get on it now.

2) Not Paying Off Their Credit Cards Monthly

Do you like throwing money away? Then this is a great way to do it! Visa, Mastercard and Amex really appreciate it because it’s made them multi-billion dollar enterprises. I understand that some people have credit cards they are trying to pay off from large purchases. That’s not what I’m talking about. The average consumer doesn’t pay off their credit card in full monthly before the bill is due when they have the money.

So what’s an easy way to fix this behavior? Automate. Set your credit card up to autopay the balance one day before the monthly payment date. This knowledge will also keep you from overspending.

3) Losing To The “Convenience Temptation”

This is a term I made up. Basically, I’m referring to quick, easy items that are expertly positioned to get you at a point of weakness. Candy bars, magazines, gum, 20oz sodas, bottled water imported from remote areas of the earth…they are called “impulse buys” for a reason.

Marketers are scientists. They are profoundly aware of human behaviors, psychology and weaknesses. This is how they manipulate…er…I mean “do marketing”. Look, marketing isn’t evil but it can hurt us if we aren’t aware of their subconsicous forces. 60% of people polled bought candy within the past few months at a checkout lane and 45% bought a drink. These are budget killers and usually bad for your health too.

4) Not Matching Your Employer’s 401k Plan

Many businesses offer a 401k plan and most of them will offer some type of match as a benefit. So they might match up to 4% of your contribution annually for example. It ASTOUNDS me how many people don’t take advantage of this.

First off, you should be contributing to your 401k regularly if you have one. Secondly, you HAVE to contribute, at minimum, whatever your employer will match. That is literally hundreds and even thousands of dollars a year you would be missing out on.

5) Paying Everyone Else Before You Pay Yourself

Get paid. Pay me. Pay bills. See what’s leftover for everything else.

That should ALWAYS be your process. What does “pay me” mean? It means taking a pre-set portion of your budget and putting into savings and/or investments. This is extremely important to do first because…

• You will build your net worth
• You will have savings in case of emergencies
• You will feel more confident and satisfied on a daily basis
• You will spend less on pointless things
• You will reach financial freedom

Every financial professional worth a damn will tell you to do this. It isn’t a secret. It’s essential to your personal financial success. So how can you do this easily and consistently? Automate. You’ll find I give that advice a lot. You automate your bills to be paid online, so why not automate yourself to get paid too? Open a savings account and have your preset amount to deposit into it on the days you get paid.

6) Not Negotiating Your Credit Card Rates

Visa, Mastercard, American Express and every other credit card out there wants you to make interest payments. It’s money in their pocket. If you have a credit card you are trying to pay off that has a high interest rate, call them up and negotiate. Tell them you are paying it off and need a lower rate. Many will do it on the spot.

If they don’t acquiese to your request, then threaten to transfer your balance to another company. They’ll usually cave then. After all, they’d rather drop your rate from 20% to 10% and make money on that 10% you keep paying than having you transfer it to a different company and getting paid zero on it.

7) Never Changing Your Insurance Plan

Chances are you don’t even think of your insurance. I don’t. But we pay a lot for it and there’s so many kinds of insurance! Health. Auto. Home-owners. Renters. Pet. Business. Life. Heck, you can even get insurance on your hair! Health insurance is tough since its usually tied through your employer, but the others you can change at any time. If you haven’t negotiated your insurance in the past 2 years, you can almost guaranteed get a lower entry-level rate at another company that will save you hundreds of dollars a year.

Insurance companies usually offer lower fees for new clients to get them in the door and slowly raise rates over time. Take advantage of those entry level rates when you can!

I hope this was helpful and you are able to take advantage of some, if not all, of the tips. I want to reiterate what I said at the beginning of this. We have to manage ourselves and create good habits if we are going to get ahead. Because if we won’t develop our own money habits, others will do it for us.