If you’re single, you're likely only hurting yourself with your bad money habits. But if you have a family, your financial missteps can impact your spouse and kids. Unfortunately, you might not even be aware of the damage you’re doing.
It’s highly important to examine your spending and the way you handle your finances to identify any harmful habits. Here are seven toxic money behaviors that could affect your family — and tips to change your spending habits for the better.
You Overspend on Little Things
It's easy to get into the habit of spending your money on seemingly small things: a daily coffee, lunches with coworkers, after-school treats for the kids. However, this sort of mindless spending can burn through your paycheck and sabotage your family's finances.
"It's really that unconscious spending that's ruining financial dreams across America," said Marlow Felton, author of "Couples Money." Overspending on little things is the worst habit Felton said she has seen among the thousands of couples she's met with over the years. That's because all of their money that's going toward nonessential expenses could be put toward improving their financial situations.
Survey Says: Overspending is Killing Your Relationship
For example, Felton said she often meets with families who say they can't afford to save for their children's college education. When she asks how often they go out to eat or get Starbucks, it becomes clear that they easily could come up with $200 per month for college savings by spending less.
"They just don't make the connection between all of those little things," she said.
To stop spending money unconsciously, Felton recommends having two checking accounts — one for household expenses and one for nonessential expenses. Keeping money for fun activities separate will help limit that unconscious spending and ensure you have enough to pay bills, reduce debt and save for the future.
You Fail to Plan Your Spending
If you're overspending on little things, you're likely guilty of another bad money habit: failing to plan your spending. In other words, you don't know where you want your money to go because you haven't taken the time to figure it out.
"If you don't sit down and have a discussion about your financial values and goals, you're certainly never going to reach them," said Dr. Brad Klontz, a financial psychologist and author of "Mind Over Money."
You and your partner should identify short-term goals (like taking a vacation or having enough cash to pay for holiday gifts), intermediate goals (saving for a car) and long-term goals (retirement), he said. Figuring out what you want in life will give you a reason to save your money rather than waste it on things you don't need.
He also recommends naming your savings accounts to stimulate the emotional side of your brain and help you visualize the payoff of saving. For example, you could have a "beach vacation" account, a "house in the suburbs" account or a "retire and travel the world" account.
"It's the most motivating thing you can do around your money," Klontz said. "The more planning you can do, the more visualizing, that makes it really easy to sacrifice today."
You Hide Your Spending
Hiding your spending or keeping financial secrets from your significant other can create both financial and emotional problems for your family.
"When you spend without telling your partner, they will find out, and there will be a double whammy to deal with," said April Masini, a relationship expert and founder of Ask April, an online relationship advice forum. "One is the amount you spent. Two is the mistrust you start to build when you betray your partner financially. Secret spending isn't just about money. It's about trust."
Felton said she's seen this bad habit among many couples. For example, people use their business to siphon off funds to spend as they want, she said. By using their business accounts, they can hide their spending from their spouses. This hidden spending can wreak havoc on a family's finances.
"I've seen people drive their business into the ground," Felton said.
To break this bad habit, Felton recommends having conversations with your partner about your family's finances. Figure out together where your money should be going. Then you can agree on an amount each can spend with no questions asked. She recommends putting that "fun" money in a separate account.
"That little bit of liberation emotionally is going to free up people to where they don't feel like they have to hide money," Felton said.
You Try to Keep Up With the Joneses
It's hard not to feel pressure to keep up with others. That's because the desire is hardwired in us, Klontz said.
"If you're not in the middle of the pack or leading the pack, you're vulnerable," he said. "Your animal brain says, 'If I'm left behind, I'm going to die.'"
The problem arises when you spend more than you can afford to give the appearance that you're doing as well as you assume others are. Not only will keeping up with the Joneses keep you broke, but you'll also teach your kids that it's okay to spend money to impress others. Then they'll constantly be asking you to buy things because their friends have them. To resist the urge to spend money to keep up with others, stop assuming that the Joneses are in great financial shape.
"They're not, by the way," Klontz said.
In fact, that extravagant couple you admire might be deep in debt with a big mortgage, car loans and credit card bills. Instead of trying to keep up with another person's lavish lifestyle, spend time figuring out what you truly value. Would you rather have a lot of stuff and be weighed down by debt, or live within your means and be financially secure?
When your kids ask for things, use the opportunity to talk about your values, Klontz said. Don't tell them you can't afford something. Instead, let them know that you'd rather use your money for something that has more value — such as a family vacation, their college educations or the ability for one parent to stay home with the kids.
"Give them a perspective they can feel proud about rather than ashamed," Klontz said.
You Spoil Your Kids
It's understandable that you want to give your kids the best. But if you're spoiling your kids by giving them everything they want, you're hurting your finances and their chances for future monetary success.
Part of the problem might be that you're giving them money with no strings attached. For example, Klontz said he often hears parents complain that their kids blow through their allowances. Usually the reason kids waste their money is that their parents haven't given them any guidelines.
Rather than let kids spend their allowances freely, Klontz recommends structuring how the money should be spent.
"Think about what values you want to pass down," he said. If you want them to save for the future, give money to charity and have some to enjoy in the present, then have them divide their allowances into three parts. If they get, say, $15 a week, $5 would be for savings, $5 for charity and $5 for spending. Then, when they ask you to buy them something, remind them that they can use their allowance.
You Spend Differently on Your Kids and Stepchildren
If you're remarried and spend differently on your kids and stepchildren, that habit could have a big impact on your family. Don't assume that your stepchildren won't notice the difference in your spending habits — or that your spouse won't.
"Blended families have all sorts of emotional landmines waiting to blow up," Masini said. "The way you treat the children when it comes to money is not just potential fodder for your relationship with them. Their parent (your partner) is going to have a problem with unfavorable treatment."
To avoid problems, you need to have open conversations with your partner.
"Create a united front between parents and plan ways to spend, save and allocate financial resources for kids and step-kids," Masini said. "When you're both on board because you've discussed and processed the issues, your kids will feel cared for and not diminished."
You Won’t Spend Money on Family Members
You pride yourself on your frugal ways — and your family's finances might be better off for it. But your relationship with your family could be suffering if your penny-pinching habits prevent you from spending money on your loved ones.
"Stingy behavior isn't just about money," Masini said. "When you skimp on your partner and family members consistently, you give them the impression they're not that important to you."
Tell yourself that it's okay to spend generously on a loved one from time to time — especially for a birthday or anniversary, she said. With all of the money you're saving by pinching pennies, you should be able to set aside some in an account to buy gifts. If you've budgeted for that expense, you won't have to feel guilty about spending the money.