Spring Cleaning: Get Rid of Bad Financial Habits

Kyle Brice
Greater Nevada Credit Union
With the economy bouncing back, so are many of our bad financial habits. According to an article posted by Nasdaq the number of Americans spending more and saving less has increased by 28 percent over the past five years. Since spring is a time of new beginning and growth, what better way to start fresh than by doing some spring cleaning for financial practices. This list includes some bad habits you may have been guilty of (I certainly have been). Break out your dusters and rubber gloves, and let's get started!

We all have bad habits when it comes to our money, and we all know that we should be better about it. All it takes to build good habits is a little diligence and discipline in the beginning. But after a while, good money choices will become second nature. So good luck in your spring cleaning.

  1. Spending more than you make- When I was working in politics, one of my bosses told me he used to be a financial advisor. In questioning him about how that worked, I got the best financial advice of my life. He said, “It’s easy, all you have to do is tell people to spend less money than they make.” As we discussed in past blogs, having a large amount of credit available is a good thing but using that credit to live outside your means is not. If you have extra money after paying bills, buying essentials, contributing to your retirement, and putting away savings it’s okay to spend it, but don’t jeopardize your future financial security to maintain a standard of living you can't really afford.
  2. Spending money before you have it- We all bank on payday, and might spend a little more than we should the night before because we know the money will be there tomorrow. With tax returns rolling in this is even more common. Your check is in the mail; that’s basically money in the bank right? Might as well spend it. Except that money isn’t in your bank. You don’t know what is going to come up in the next week. The electronic transfer might encounter an issue or an unexpected debit may occur, leaving you with bounced checks and extra fees. Spending money you will most likely have in the future is still living outside of your means. An easy way to curb this habit is by thinking of “extra” money as savings money. Whether it’s going to your retirement or your emergency fund, putting that money away is a great way to stay within your means and keep your financial future bright.
  3. Spending too much on things you don't need- We all do it. Impulse buying is a difficult habit to break. Every time I’m at Wal-Mart I can’t help but dig through the five dollar movie bin, looking for the lost treasures of my childhood. While you can’t argue with the cinematic genius of “The Goonies”, you can argue that spending five extra dollars here and there on impulse buys adds up quickly. If you find your impulse buys are becoming a regular thing try to work them into your budget. Allowing yourself a predetermined amount of fun-money helps curb the risk of binge spending. Speaking of budgets…
  4. Not sticking to your budget- We’ve already talked about the importance of creating a budget. It is the first step to financial stability, but it only works if you use it. Constantly over-spending makes your budget useless, and makes the time spent working on it a waste. If you find that you just can't stay within it, maybe you can reevaluate the budget to make sure it's realistic. Make adjustments to make your budget achievable. Then be good to yourself by being disciplined about it.
  5. Making the minimum payment on credit cards- It’s always tempting to just pay the minimum; heck it’s even what your credit card company wants. This is a terrible habit we should all break. Your best bet is to not have any rolling debt, but if you do, make sure to pay more than the minimum. This will show positive payment history, while working down your debt, decreasing the total interest you’ll pay, and help your credit utilization ratio.
  6. Waiting to pay bills- So you’ve made your budget, gotten all your spending in check, and have money set aside to pay your bills…then you put off writing the check/making the online payment and next thing you know there’s a late fee on your account. I seriously did that for three months in a row with my cable bill, which is by far my least expensive bill per month. Thirty dollars in late fees later (the total amount of the monthly bill), I finally took the five minutes to set up an auto pay. Moral of the story, late fees are the worst. So get in the habit of paying your bills on time or early.
  7. Not checking your credit score- This is not so much a bad habit as an overlooked necessity. Everyone wants a good credit score (except for maybe that hobbit hole guy but he’s the exception not the rule), which means we should at least know where we stand. Also, checking your credit report regularly helps make sure you catch discrepancies, incorrect items reported and sometimes even identity theft.
  8. Not saving- Don’t let the perfect be the enemy of the good: meaning just because you can’t save a lot doesn’t mean shouldn’t save anything. I could use a lot of other clich├ęs about having to start somewhere, but I think everyone knows they should be saving money. So trade this bad habit with a good one, and start paying yourself first. There are several online tools to help you build a savings habit in ways that won't break the bank. Try this 365-day savings challenge, for example, or this 52-week savings challenge. In fact, our Saving Money Pinterest Board, has all kinds of tips and tricks, and we're always adding more.
  9. Being unprepared- If 2008 taught us anything it’s hope for the best, but prepare for the worst. Sometimes things just happen, and they are out of your control. You can handle these things one of two ways 1) panic and ruin the credit score you’ve been working so hard on, or 2) shift your budget around, make some sacrifices, and get through it with your head up. I like to take “The Hitchhiker's Guide to the Galaxy” approach, but that’s just me. If you have an emergency fund these unexpected moments are a great time to use it, if you don’t have an emergency fund right now (today) is the best time to start building one.
  10. Not contributing to employer-sponsored retirement plan- Seriously, if your employer offers a matching program this is free money you are turning down. Let me say that again, FREE MONEY, and you’re saying, “nah I’m going to ride out this whole social security thing and hope for the best.” Don't leave money on the table - that's not a great way to save.
We all have bad habits when it comes to our money, and we all know that we should be better about it. All it takes to build good habits is a little diligence and discipline in the beginning. But after a while, good money choices will become second nature. So good luck in your spring cleaning.
04/18/2014