Financial wellness is a growing concern for Americans. The reality of the situation is that regardless of how much money you have, there are certain things you can do to get on top of your finances and feel more secure.
What’s worse is that many people don’t realize they have habits that could be hurting their financial health without them even being aware.
These bad habits are usually ingrained in our lives from childhood, or just picked up along the way, but it doesn’t mean they can’t be broken with some dedication and work!
Top Financial Wellness Tips
Here are some common bad habits to watch out for when trying to make your finances healthier.
Not accounting for all categories
When you look at your budget and think about where your money is going, do you ever get the feeling that it’s not adding up?
It’s possible there are certain categories that get forgotten. Perhaps you’re spending a lot on clothes, but don’t realize how much of what you pay for is on new clothes.
Oftentimes, you’ll find that the overlooked categories are ones where you spend money without thinking about it. For some people this could be makeup or entertainment expenses, but whatever the case may be, make sure to check for these misplaced funds so you can redistribute accordingly.
Buying things that are not in budget
Going along with the previous point, it’s important to make sure that the money you’re spending is going towards things that are actually on your budget. So if you have a plan for how much you’re allowed to spend on clothing, don’t go over that amount just because something catches your eye.
Sometimes it’s difficult to stick with your budget, but by not breaking the rules you set for yourself, you’ll feel better about where your money is going.
Using credit cards
Credit cards can be a blessing and a curse – they make it easier to make purchases on-the-go without needing cash on hand, but they can also be a big problem if not handled correctly.
Credit cards have their perks, but using them to make purchases you can’t afford will get you nowhere in the long run.
You might get away with it for a little while, but eventually your debt will catch up with you. If you use them strictly for emergencies or big purchases, and pay them off at the end of every month, you should be fine.
Credit card fraud
Like any other transaction involving your credit card or bank account, there is always a chance that someone will try to take advantage of you.
Luckily if you’re using a major credit card such as Visa or Mastercard , it’s covered by zero-liability fraud protection, meaning you won’t be on the hook if your card is compromised.
Closing accounts with great terms
It can be tempting to close an account that offered you some sort of bonus for signing up if you no longer make use of it.
But unless you’re trying to improve your credit score, or you’ve discovered some sort of issue with the account (such as an annual fee), it’s best to hold on to these cards.
Even if you don’t make use of them, closing them can hurt your credit score by reducing your overall available credit line, which in turn will decrease your credit utilization ratio.
Keeping a checking account you don’t use
If you happen to have a checking account that you hardly use, it may be time to let it go and move on.
Having an extra checking account adds no benefit unless there is some sort of incentive from the bank to keep it open, such as free checks or access to free ATMs at the branch.
Paying bills late
It may be a case of simply forgetting about a bill, or maybe you’re dealing with some life-changing circumstances that have put you behind on all your finances, but if you’re consistently late paying your bills something needs to change. Even one month of not making a payment on time can harm your credit score. And if you don’t pay it off in full, you could end up paying a lot of money in interest and fees.
Ever tried to quit smoking only to realize that now you just buy more cigarettes than usual? Or maybe you’re an avid alcohol drinker and you realize that your normal Friday night buying habits have turned into a weekend-long bender.
Whatever the case may be, it’s important to recognize how these addictions influence your finances so you can figure out where else they might impact your life.
Paying for things you don’t use
While paying for things like Netflix or Spotify may not seem like a bad thing, doing so every month when you never even log in to the account is just frivolous spending.
If you’re paying for something that’s not bringing any value into your life, it’s time to let go, and only pay for things that are actually useful to you.
Not taking advantage of seasonal discounts
Every season brings a slew of sales and special discounts, but if you’re not taking advantage of them it’s sort of like throwing away money.
If you see an offer that has your name all over it, use it! It might be the only time you can get that item at such a great price.
Buying More Than You Can Afford
When you’re buying something, it’s important to make sure that you can afford it. This means that you should only buy things that you can actually afford, and not go into debt in order to buy them.
There are a few reasons why it’s important to stick to your budget when you’re buying things. First of all, if you’re buying something that you can’t afford, then you’re going to have to go into debt in order to pay for it. This can be a very risky move, since you might not be able to pay back your debt. Secondly, if you’re buying something that’s too expensive, then you might not be able to enjoy it as much as you would have if you’d bought something more affordable.
If you keep these things in mind, then it will be much easier to stick to your budget and buy only the things that you can afford. You should also remember that there are many other purchases that might seem like a good idea at the time but end up being too expensive. For example, it would probably not be a good idea to buy a car if you can’t really afford it.
Top Financial Wellness Faq’s
- – How to stay on budget and stick to a spending plan
- – 5 easy ways to boost your credit score in one day
- – 7 tips for living below your means
- – 10 steps for building up an emergency fund