Upon the New Year many people aim to do things they wish to do, but when it comes to financial resolutions, there might be things that you are better off avoiding. Here’s a list of bad money habits you should avoid.
Your New Years Financial Resolution
The end of a year is a time to take stock. It is a time to review the past year– personally, professionally and even, financially. However, it is also a time for planning. This is why making New Year Resolutions can be quite beneficial – especially if they are financial resolutions.
The Scores on New Year Resolutions – What the Numbers Reveal
Recently, Fidelity Investments conducted the sixth New Year Financial Resolutions Study. The study aims to explore attitudes toward making financial New Year Resolutions. The key findings of the study established that:
- Only 31 percent of Americans are considering a financial resolution for 2017, as opposed to 43 percent in 2016 ( a drop of 28 percent)
- Of the people who made a New Year’s Resolution at the start of 2016, about 51 percent feel that they are financially better off by the end of the year
- Only 38 percent of those who did not make a New Year’s Resolution at the start of 2016, feel that they are financially better off at the end of the year
- Of the people who made New Year Resolutions at the start of 2016, 29 percent achieved their goals completely, while 74 percent realized at least 50 percent of their goals
The Top Bad Financial Habits That You Need to Get Rid of in the New Year
Many people make resolutions in the New Year. They generally aim to do things that they could not do in the year that went by. However, when it comes to financial resolutions, there might be things that you might be better off avoiding as well. Here’s a list of bad money habits that could be making you squander your hard-earned money.
- Paying Various Bank-related Fees Regularly: From late fines and penalties to overdraft fees, some people end up paying their banks more than they need to. Avoid late fines by ensuring that you pay your bills on time. If you have difficulties keeping up, consider using apps to stay on top of your bills.
- Taking Loans for Dealing with Emergencies: Some people take out payday loans or home equity loans to meet their unforeseen expenses. As a result, they often end up paying more interest. To avoid this, ensure that you set aside $10 – $25 (or more) each week and place it in an emergency fund. By doing this, you will have about $520 – $1,300 by the end of the year. Alternatively, consider creating an online savings account. Thereafter, you could set up an automatic debit from your pay into this account.
- Overspending: Many people fail to distinguish between what they “want” and what they “need”. As a result, they end up shopping compulsively. To avoid this, postpone your intended purchases for a few days. Thereafter, assess whether you still want to purchase those items.
- Spending Money As Soon As You Get It: Many people end up spending their paychecks as soon as they get it. As a result, they end up having no money to pay their bills. Therefore, make a budget that details your earnings and expenses. Allocate the funds to pay for your expenses. In addition, keep some amount as your savings for the month.
- Carrying a Balance on the Credit Card: To avoid paying unnecessary interest, consider getting rid of your credit card debt. Pay the monthly minimum balance on all the cards, except for the card that has the lowest balance. Apply as much money as you can for repaying the card with the smallest balance. Once you repay this card completely, start repaying the card that has the next smallest balance. Repeat this until you have no balance on any of your cards.
- Ignoring Saving For Your Retirement: Oftentimes, people do not contribute enough to their retirement plans. Ideally, consider setting aside 10 – 20 percent of your income for your retirement plan. Alternatively, consider increasing your contributions by one to two percent each month until you touch the desired limits. Ensure that you touch the contribution limits that your employer will match.
- Buying Your Meals, Snacks or Coffee Everyday: If you spend money on buying snacks and meals every day, your expenses will keep mounting. Consider taking your lunch from home. You will be eating healthier food, without having to pay as much for it.
By getting rid of these habits, you could curtail your spends. This will result in boosting the money you retain – for necessary expenses or for savings. This New Year, do not focus solely on acquiring good financial habits. Consider getting rid of some bad financial habits too.
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