Beat Problem Money Habits

Are you finding that your money habits aren’t as good as they should be? If so, it’s never too late to change! Consider these problematic money habits, then take the next step and make a change for the better both personally, and financially.

Money Habit #1:  Not Having a Budget

It’s hard to make informed financial decisions when you don’t have a budget. Budgeting allows you to track how much money you are bringing in (employment, investments, etc.) and how much is going out (expenses). Only when you understand your finances can you make other major financial decisions, such as buying a house or planning for retirement. Consider using online tools such as Mint.com to make your own budget.

Money Habit #2:  Not Saving for Retirement

According to Time.com, one out of three Americans has zero savings for retirement. Zero! If you fall into this category take the next step and set up a plan. Check with your employer to find out whether or not they offer a 401k option, and also if they match. If not, consider opening a Roth IRA. There are calculators available online that allow you to determine how much money you will need for retirement.

Money Habit #3:  Not Having an Emergency Fund

This is a fund where the money you save is kept in reserve in case of an unforeseen emergency such as:

  • Sudden loss of income from an injury or job loss.
  • A disaster such as a fire or a flood.
  • Any other unforeseen event.

An emergency fund is not intended to be used for additional spending. It’s money that you save and don’t touch until you really need it. Betterment.com has its own online calculator for determining how much you will need to save for an emergency fund.

Money Habit #4:  Not Using Those Gift Cards

We all get gift cards, but do you always spend them? Maybe you get a gift card for a retailer, restaurant, or other business that you’re not interested in? There are things you can do with those gift cards without being obligated to use them at the shop or restaurant they’re intended for. For instance:

  • Use Coinstar to cash out the money on the card if there is a kiosk in your area.
  • Donate your card to Gift Card Giver, which collects unused cards and then redistributes them to non-profits.
  • You can try to exchange the card for another through Walmart. Note that you might not get the full value for the card.

Instead of wasting that money why not be resourceful and find a better use for those gift cards?

Money Habit #5:  Not Paying Your Credit Card Balance 

This is not just problematic, it’s a very serious issue. Paying only the minimum balance on your credit card each month just digs you into a deeper hole. The further in you get, the harder it is to get back out. The damage that results from carrying the balance means not only getting seriously into debt but also having high-interest rates. These rates just mean more money that you will have to repay the credit card company.

Additionally, getting into credit card debt is a warning sign that other issues are at work. Besides consulting with your credit card company for a repayment plan, talking to a therapist who specializes in financial therapy would be helpful as well.

If you think you have some these problematic money habits, why not take the next step and make a positive change for yourself and your financial future. Consider making a budget, saving for retirement and an emergency fund, and using those gift cards. If necessary, consult with a financial therapist for things such as credit card debt to get to the root cause of why your spending has gotten out of control. These changes will help you not just financially, but also personally when your financial life is under control.

Denise Kautzer is a Licensed Professional Clinical Counselor and a Certified Public Accountant whose practice is located in St. Paul, MN. You can view her website at www.denisekautzer.com or contact her at denise@denisekautzer.com

 

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