Developing good habits helps us focus on the things that need our attention most.
But as you work to get your financial life on track, you’ll probably find some 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 habits, and tips for ending them.
1. Carrying a credit card balance
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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 and cost you at least $7,000 in interest.
Think what you would love to do with that $7,000.
Build a better habit: One approach to erasing the card balance is to devote every spare penny to getting rid of it. If you have other pressing debts, make a plan for dealing with all of them. Here’s how to kill your debt and write its obituary.
Keep the balance from building again by making it a new habit to pay off the entire bill every month — no exceptions ever.
2. Failing to fund a retirement plan
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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’ll look, your surroundings, 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 bring your plan’s monthly contribution up to your goal 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
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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 and landline phone
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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, just observe yourself and your habits. Record your viewing habits for a week or two to see how and if you’re using the services.
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
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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. Localpizzadeliverywalledlakemi.info’ deals page, for example, has new sales and coupons every day relating to clothes, shoes, electronics, tools and more.
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.
6. Playing investing too safe
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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.
Localpizzadeliverywalledlakemi.info founder Stacy Johnson offers some tips in “Ask Stacy — How Do I Invest in a Mutual Fund?”
7. Getting hooked on lattes
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That $4 latte is killing your budget. One such latte a day each workday adds up to $20 a week — $1,040 a year. If you tip a dollar each time, you’re spending $1,300 a year. There’s surely something you would rather do with that $1,000.
Build a better habit: Substitute new habits you enjoy for the old ones. A latte is a way of treating yourself, so find treats that don’t bust your budget.
8. Living without an emergency fund
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If you don’t have an emergency fund, your life is a high-wire act with no safety net. Emergencies are inevitable. Life is full of them.
Build a better habit: Make a commitment to change. Write down your pledge and put it where you’ll see it. This will allow it to reinforce your resolve. Keep the change at the forefront of your mind and tell yourself continually, “I can do this.”
Commit and watch your savings build. If necessary, take on a few hours of extra work each week, whether it’s overtime at work or watching neighbors’ dogs. For more tips, check out “9 Ways to Build an Emergency Fund When Money’s Tight.”
9. Buying retail
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Paying retail markup is like setting a match to a pile of cash. Smart buyers find ways to avoid doing that.
According to Edmunds.com, a new car’s value drops 8 percent the minute it leaves the dealer’s lot. At the end of the first year, it’s worth 19 percent less. After two years, it’s worth 31 percent less.
One caution: There are things you should never buy used, including pet food, blenders, hats, mattresses, underwear, swimsuits, vacuum cleaners, stuffed animals, tires and software.
Build a better habit: If you feel pressured to keep up with your friends or neighbors, ask yourself what that’s costing you. Stay out of malls and brand-name stores except when researching products. Read up on prices online so you know a good price when you see it.
Shop at wholesale clubs and bulk stores, garage sales, consignment stores, thrift stores, online auction sites and classified ads. You’ll find especially good deals on used cars, refurbished electronics, jewelry, furniture, housewares, clothes, tools, books and sports equipment.
And check out this post: “From DVDs to Baby Shoes: 43 Things You Should Never Buy.”
10. Using shopping as entertainment
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Perhaps you know people with compulsive shopping habits. Maybe you are one of them. Spending creates a high that’s addictive and can severely damage your budget and the financial security of your family.
Build a better habit: Try a spending fast. Remove your name from catalog lists, stay out of stores and hang out with friends whose idea of fun doesn’t include shopping.
Check out “18 Ways to Slam the Brakes on Impulse Buys,” for more tips.
But if none of these habit busters works and you’re still struggling with your shopping habit, you may need help. is a free, nonprofit 12-step organization based on the principles of Alcoholics Anonymous.
Do you have tips for breaking bad money habits? Share them in comments below or on
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