Are You Making Serious Financial Mistakes?
It’s almost impossible to go through life without picking up a few bad financial habits, especially if you didn’t become financially conscious until adulthood. The good thing about bad habits is that you can always change them into more positive ones. Here are some common mistakes you might be making regularly — and how to turn them into good ones that will result in greater financial security. Check to see if any of the following apply to you:
You visit restaurants more than once or twice a week. Some people tell themselves it’s necessary: they’re too busy to cook for themselves or their job just gets in the way. While this may be true for you, the amount of money you could save by adjusting your schedule to make your own meals makes it worth trying. Chances are, you’ll end up eating a lot healthier than you have been! If you’ve never cooked before, pick up some cookbooks aimed at health-conscious college students. The recipes will be simple, tasty and require a minimum of kitchen equipment.
You don’t spend time looking for the best deal. Whether you’re shopping for a new coat or your health insurance, it’s important not to jump at the first offer you see. The most visible deals are frequently less worthwhile than those you have to look a little harder for. Remember, the lowest price isn’t always worth the savings — nor does the highest price always denote the best quality. When planning a new purchase, make an ordered list of at least five criteria that are important factors for you. As you find options, rank them by your criteria and then decide.
You don’t take an active role in your health. Do you find yourself skipping checkups at the doctor or dentist? Do you talk yourself out of a gym membership because “it’s too expensive”? It might seem like you’re saving some money by foregoing these expenses, but in the long run, you take the chance that a small health problem might grow into a big one. A little proactivity will go a long way toward decreasing your risk of unexpected medical problems.
You don’t have a budget or keep track of purchases. Even if your bank account always seems comfortably full, chances are you’re mismanaging your money. Together, budgeting and keeping detailed records of your spending are some of the best tools to analyze your financial future. Starting a budget from scratch isn’t as difficult as it may seem. Just keep all of your receipts, especially for cash purchases. Keeping accurate records is required for an accurate budget. At the end of the month sort your expenses into categories. As you total it all up, ask yourself if there’s anything you’d like to change.
You don’t have an emergency fund. Even the most frugal and diligent budgeters will have trouble sticking to their plans in the face of the unexpected. A major auto or home repair can hobble your financial security for months if you didn’t have some “just-in-case” money. Set aside a little money until you’ve built up $2,500 for emergency medical bills or auto repairs. Then, over time, work on building it up so you can cover at least a few weeks’ worth of expenses in a pinch.
You’re not saving for retirement. Millions of people have less than $1,000 set aside for their golden years. Although it’s still possible to retire on Social Security alone if you keep your costs down, numerous analysts have raised serious concerns whether that will be the case much longer. If you’re looking forward to a semblance of comfort in your old age, the time to invest is now. The best way to start is to ask your HR department if your company offers an employer-matched 401k.