5 Bad Money Habits That Are Harder on Your Wallet Than Paying Bills
Written by
Cindy Lamothe
Edited by
Amber Barkley
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Paying bills feels like the most painful part of adulting — but believe it or not, some of your everyday money habits could be draining your wallet even more.
“I have seen firsthand how certain financial habits can compound problems for individuals who feel trapped by high bills and mounting expenses,” said Dennis Shirshikov, professor of finance at City University of New York and head of growth and engineering at GrowthLimit.
While managing bills is a necessity, he explained there are underlying money habits that tend to exacerbate financial struggles, often without folks realizing the long-term consequences. These habits, left unchecked, can erode wealth and prevent people from improving their overall financial standing, even when they are already overwhelmed by their “needs” bills.
From sneaky spending patterns to financial blind spots everyone falls into, here are a few habits that might be costing you more than your rent or electricity combined.
Overlooking Small, Regular Expenses
“One of the most destructive behaviors that people develop is that of discounting the small, regular costs that seem as though they don’t matter on a day-to-day basis,” Shirshikov said.
Things like subscriptions, convenience services and regular, seemingly harmless purchases can add up unchallenged — you won’t miss spending $10 or $20 on a daily basis, perhaps, but in the long run, those little bits add up to hundreds of dollars that could easily be saved or channeled into other, more lifestyle-defining, financial aims.
Not Saving for Emergencies
One of the most common mistakes, according to Kevin Shahnazari, founder and CEO of FinlyWealth, is being paycheck to paycheck and not saving or setting aside funds for unexpected events.
In fact, one U.S. News survey found that two in five Americans (42%) don’t have an emergency savings fund.
“When individuals are not saving even a fraction of their income for the future, they put themselves in a situation where they are constantly scrambling to cover unexpected expenses,” Shahnazari explained.
This can result in a stack of high-interest debt, which only makes the problem worse in the long term.
Relying Too Heavily on Credit for Daily Needs
Many, particularly those with high costs, use credit cards as a way to balance income and expenses. That may provide breathing space, but tapping credit to pay for staples — in particular, not paying off the credit card in full every month — adds to the financial pressure.
“And this habit winds up racking up interest charges, late fees and a balance that grows all but impossible to pay back,” said Shirshikov.
Failing To Track Spending and Budgeting Effectively
A much more common problem is the absence of a well-defined, actionable budget.
When people don’t know what they’re spending, they can lose track of where their money is going, which creates an illusion of money well-managed, even if they are living paycheck to paycheck.
“Budgeting is more than just running the numbers to see where your money is going,” Shirshikov explained.
Letting Financial Problems Linger Without Seeking Professional Advice
Another canker to your monetary life is failing to seek help from a professional when money is your problem.
It can seem scary to ask for help — especially when you feel like you’re in a financial rut — but a lot of people put off addressing reasons behind their money struggles because of fear, embarrassment or just not being sure where to start.
“A financial planner or credit counselor can offer valuable guidance on long-term solutions, ranging from debt management techniques to the types of qualified investment opportunities you should consider,” Shirshikov explained.
The Bottom Line
For people who are already overwhelmed by high bills that seem impossible to make smaller, Shirshikov said focusing attention away from the immediate costs and on these deeper financial habits can be an enormous win.
Take control back. Start improving your financial situation through greater awareness, conscious effort and professional assistance to make the necessary strategic changes.
“It is possible to take back control and realize financial improvement,” Shirshikov said.
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Sources
- Dennis Shirshikov, GrowthLimit
- Kevin Shahnazari, FinlyWealth
- U.S. News, “Survey: 42% of Americans Don’t Have an Emergency Fund.”
