When we’re planning for New Year resolutions, we often discuss what new things, habits or positive reinforcements that are going to take place. We focus so much on the newness of it all, we rarely reflect on some behaviors we need to actually detach ourselves from. As it relates to finance, are there any specific things that come to mind? Take a look and avoid these silent, but detrimental traps to protect your family and funds.
Throwing in the towel
Oftentimes we believe that there’s more time to save money or layoffs can’t greet you with open arms at the door. The economy shifts, and most times it’s not in your favor. Don’t make the mistake of assuming there’s more time – because if there’s one thing that is constant; it is time.
Not maintaining a budget
Every dollar you spend should be assigned to a ‘bucket’ – whether it’s bills, entertainment, groceries or miscellaneous expenses. Take the time you need to create, adjust and maintain your budget on a regular basis. There’s nothing worse than accumulating impulse purchases and not having enough money to cover living expenses or maintaining your savings plan.
Skipping the review of your bank statements
The only sure fire way to see where your money is going is to review each and every purchase. Thinking this isn’t an important step in your budgeting causes you to create a budget that isn’t completely accurate.
Paying bills late consecutively
Not only does this create a bad pattern, you rack up late fees – which can affect your credit history. Make sure you take the time to review bills and create a calendar that includes the bill information, specifically the amount and the due date. Preparation is key to achieve financial success.
Racking up credit card debt
Use this rule of thumb: if you are unable to pay off the amount by your next pay period comfortably, it doesn’t need to be charged. It’s always alluring to swipe and worry about it later – but that’s exactly what purchases (with no plan) create, mounds of worry. Create some boundaries such as removing them from your wallet and saved online profiles.
Opening new lines of credit regularly
Don’t fall into the temptation of transferring previous credit card balances to a new card with no intent of paying it off before the promotional 0% APR ends. This creates a cycle of opening new lines of credit with no income to actually resolve the debt. Work to pay off debt incrementally to reach financial freedom.
Emotional or impulse spending
Before you make any purchases, ask yourself some important questions. Is this something I actually need? Why do I want to buy this? Don’t make purchases to impress people you don’t know! The FOMO (Fear of Missing Out) isn’t a reason to spend money that should be allocated to other things. If you must, leave things in your online cart for a few days. Most times, we forget and move on. The whole purpose of online marketing is to persuade you to spend money by any means – make sure you’re able to fight the urge to secure your future.
Incurring overdraft fees
According to a FDIC report, in 2017 large banks reported making $11.45B in overdraft and non-sufficient funds (NSF). Save yourself the hassle and be sure to check your accounts daily to make sure transactions are clearing properly.
Avoiding debt repayment
Avoidance is essentially acceptance. Just because you don’t pay debts doesn’t mean it will magically disappear. To avoid overwhelm, plan to target one creditor at a time. You can either start with the smaller debts or the accounts with the high interest rates. Create small milestone wins to motivate you along the journey.
Not holding yourself accountable financially
The only person you’re hurting is yourself. The way you show up when no one is watching is what really counts. Make sure you keep the momentum and do what needs to be done to crush all of the goals you’ve set to secure your finances.