We all have some bad money habits. But what ones can keep you from getting rich? CNN Money has an article about this very thing. One financial planner they talked to said:
“The easiest way to becoming a millionaire for most people besides discipline is automation, priorities and goal setting,” said Cary Carbonaro, a certified financial planner and managing director at United Capital.
While we don’t think following the below habits will actually make you “rich”, they will help you to live within your means and make your life more financially secure. It’s a good reminder of what you should be doing.
Here are the bad money habits CNN Money lists in their article that can hurt your long-term savings:
Saving only what’s left over
If you are only saving the money that’s left over at the end of the month, you need to redo your budget. Come up with a savings target, say 7-10%, and have it automatically taken out of your paycheck and directly deposited into a savings account. That way you don’t see it and you won’t miss it.
Setting and forgetting
When you get a pay raise, up the amount of savings at the same time. Thus, your savings rate increases throughout your career. Also, at least once a year you should review and evaluate your retirement plan. Rebalance as necessary.
Spending too much on housing
Housing is usually your biggest expense. It should be less than 28% of your gross income, and that includes principle, interest, taxes and insurance.
Not taking full advantage of tax benefits at work
Make sure to take advantage of pre-tax benefits, such as 401(k), insurance and commuter funds. Don’t pay more in taxes than you have to.
Being too conservative when investing
Have the right investments for your age. If you are younger than 40 you should have 100% of your investments in equities. The closer you get to retirement the more conservative you can get.
Be patient. Sleep on it before you purchase big ticket items. You may find you really don’t need it after all.
Paying too many bank fees
We recently had an article about this on BankScoop. Bank fees can add up, especially if you repeatedly overdraw your account. Make sure you know the terms of your account.
These are all good habits we should be following for a more financially secure future.
For the full article from CNN Money, click here.