Not everyone can be a saint when it comes to his or her spending habits —it’s just not practical to think we’ll all have pristine credit and a solid savings account at every stage of our lives. However, there are certain bad financial habits to break sooner than later. The sooner is now, ladies, so listen up! These habits can slowly kill your credit score and can mean the difference between being able to afford the little luxuries in life here and there and being unable to make ends meet.
Swiping our credit card for our favorite latte every morning might seem completely harmless. I, for one, have been known to buy myself an extra-large specialty coffee in the morning if I had to be up especially early as a way of rewarding myself. At the time it seems like nothing, but these habits when coupled with a tendency to only pay minimum payments on bills, and maybe even an impulse purchase after work later, can start to become the perfect storm headed right towards our financial health.
I admittedly never put much thought specifically into how I used my credit cards until the past few years when I realized all of those dresses I bought to impress guys at college parties (they didn't even work, ugh) were still haunting my accounts into my late 20s. That said, I started breaking some bad financial habits ASAP, and after reading this article, you might consider doing so as well.
Here are eight bad financial habits to break sooner than later:
1. Paying Bills Late
My dad is obsessed with having a good credit score so from a very, very young age (definitely before I even realized how many bills I’d end up having as an adult) he taught me to always pay my bills on time. Always. While I’ve been known to make other poor financial decision along the way, that’s the one thing I’ve never waivered on. Here’s why: According to US News & World Report, late fees can end up totally as much as 10 to 15 percent of each of your monthly bills, so you’ll be paying more than you otherwise would have. Also, to reconfirm the earlier point re: credit scores, the outlet noted if you’re regularly late with some bills, it’s likely that the credit bureau is taking notice of this and lowering your score. Wondering why you should care? According to eloan.com, your credit health is super important because it “determines what loans you will qualify for and the interest rate you will pay.” If you’re looking to buy a new house or car in the near future, for instance, your credit score will play a major role.
For the sake of your financial health, make it a priority to pay your bills on time. If you never seem to have money when your bills are due, US News & World Report suggested practicing better financial organization, such as budgeting your money into different envelopes each month as you get paid, so you know you’re prioritizing your bills first.
2. Neglecting To Track Your Smaller Expenses
Out of sight, out of mind, right? Wrong. Unless you’re swimming in cash and don’t have to worry about budgeting (in which case, more power to ya!), you should try your best to take mental note of the smaller expenses you encounter every month — the things that might seem easy to forget. Needed a $40 oil change? Have a habit of buying a $10+ lunch at work every day? Spending $100 at the bar every weekend? These are the kinds of things you might lose sight of, but shouldn’t. According to the Huffington Post, if you don’t track these expenses it becomes more difficult to see where you stand financially, and suddenly those “little” expenses could mean the difference between being able to pay those bills on time or not at all.
3. Impulse Shopping
As a woman you’ve likely experienced the urge to make an impulse purchase at one time or another in your life. You see something and you buy it on a whim, versus taking time to think about whether you actually need it — or more importantly — whether you can actually afford it. According to Andrea Woroch, a money savings expert and consumer advisor for Kinoli who spoke to Fox on the topic, “Impulsive shoppers typically don’t have a grasp on their budget nor understand where their money goes. They spend without thinking about the outcome or the necessity of the item they purchase or how that impacts their bottom line.” If you’re an impulse shopper, FOX suggested trying to only use cash to limit yourself, or making a strict list of things you need before heading to the store and not wavering from it. Woroch recommended against saving your credit card information online, as having to dig for your physical card and enter the numbers will give you time to stop and think about whether you need what’s in your cart or not.
I know this is a little off topic, but it’s true. If you’re a smoker you might have considered the hundreds of health-related reasons you should quit, but have you thought about the financial side of this? You could save so much money by dropping this habit. According to SmokeFree.gov, the average price of a pack of cigarettes is $5.31 in the U.S., so if you’re smoking one or two packs a day that’s a ton of wasted money! Check out the website’s calculator to see how much of your money is being sucked up by this habit.
5. Using Shopping As A Way To Get Happier
If you’ve heard retail therapy can be a good thing, that’s not completely off base. According to psychologist Dr. Joti Samra via The Globe and Mail, it is true that we can get a natural high from buying something new, especially if it’s something that will enhance our self-esteem and confidence (e.g., a new dress, makeup, a haircut, etc.). Dr. Samra noted for most people retail therapy doesn’t become problematic, however for some it might be a different story. She said if your shopping tendency is prompted by feelings of depression, anger, or the like, you might end up allowing your negative emotions to drive purchases you’ll later regret. Instead of running to the store when you’re in a bad mood, try some of these little tricks instead of hurting your wallet.
6. Spending Money The Minute You Get It
I’ve been here many times. I’m so strapped for cash on the last day of the month that I can’t even think straight, then when my paycheck comes in on the 1st I’m sprinting to the store and going nuts. According to US News & World Report, by spending your paycheck right away without thinking therefore neglecting to put any money aside (or budgeting for bills), you’ll regularly find yourself in a bad position when you actually need money for something. That said, try holding back the reigns when you see that direct deposit come through, budget what you’ll need for that pay period, and then see what’s left over from there.
7. Using Credit Cards For Everyday Purchases
Yet another habit I’ve encountered (and luckily was able to break!). According to the Huffington Post, credit cards are important to have, as they can certainly come in handy for emergencies or during times of dire conditions — however we should avoid using them for everyday purchases, like your morning coffee or dinner out with friends. While the cards might be sitting in your wallet just begging to be used, realize they can quickly lead to debt when used with the wrong mindset. How can we bring ourselves break habit? Huffington Post suggested those with financial woes who tend to use credits cards for everyday purchases should consider cutting all but one card. This sole remaining card, they noted, should only be used for emergencies.
8. Only Paying The Minimums On Your Credit Cards
On a final note re: credit cards, if you’re the type to rely on the minimum payment amount on each card each month, those interest rates might be silently killing you. Forbes acknowledged the fact that credit cards are notorious for high interest rates. The outlet cited this crazy fact: The average household in America has $15,355 in credit card debt, so if everyone only paid the minimum each month, it would take them up to 44 years to eliminate the debt. Oh, and remember that really important credit score convo from earlier? Having a high balance on your cards weighs against this, so try your hardest to only charge what you can afford each month, and pay off the bills in full when possible, Forbes suggested.
Now that you’re schooled on these bad financial habits, you can start making changes to the way you spend money and the way you pay bills. If you’re in financial trouble, some of these tricks can help you work your way out if you commit wholeheartedly to them — now close out of that shopping tab you have open and start bettering your bank accounts!