By now, you’ve been managing your money for years, so you should have everything under control, right?
Well, it depends. If you’re like most people, you’ve probably picked up a few bad habits.
If you’re worried your bad behaviour could be costing you money, make sure you aren’t making these heinous financial mistakes.
Bad Habit #1: Spending Your Money on Fees
A checking account, savings account, and even some investments are just a normal part of banking. But many banks charge you a monthly fee for the privilege of these basic financial products.
Depending on your bank, you may be spending as much as $15. You may also be paying extra charges by using ATMs and overdrafts.
By switching to a no-fee bank, you could save $180 a year. By reducing how often you withdraw from an ATM or rely on overdrafts, you could save even more.
Bad Habit #2: Paying Bills Late
Another fee that’s a waste of your money is late fees. Companies will charge you a fine, plus interest for every day you’re late paying a bill.
The right course of action is to make sure you always pay your bills on time, every time. This will help you avoid overpaying on utilities and other bills. It will also help you maintain a better credit score.
Bad Habit #3: Ignoring Your Credit Score
Your credit score is one of your most important financial stats because it affects how easily you can get a loan. Many traditional banks deny loans to people with bad credit.
If you forget to check your credit score, you may be surprised by what rating you have.
Don’t worry if it’s below prime. There are new options to borrow money quickly and easily without good credit. They include instalment loans from online instalment loans direct lenders that don’t prioritise credit scores when approving borrowers.
Bad Habit #4: Splurging on the Little Things
Most of us know that we shouldn’t drop a ton of cash on big ticket items. While an expensive, one-time splurge is easy to ignore, these aren’t the only ways you’re wasting your money.
Smaller purchases may not have the same immediate effects as a new car or smartphone, but their combined effects can do just as much damage to your budget.
If you expect to have enough savings to be secure in the face of an emergency, you need to target unnecessary spending and eliminate it from your budget.
Bad Habit #5: Investing in Short-Term Trading
Short-term trading represents what you think of when you imagine the floor of the New York Stock Exchange. It’s people who buy and sell according to the real-time, daily market results.
Some investors try to beat the market with short-term trading or active investing.
Although you may hit the jackpot and sell at an incredible high, the opposite is possible, too. You could stand to lose a lot of money, or gain so little that it doesn’t justify the effort.
By contrast, passive investing — or long-term investing — guarantees a higher yield. It involves a varied portfolio of investments that builds wealth gradually.
It’s more secure, even if it takes longer to pay off. And it will — even billionaires like Warren Buffet and Google’s Eric Schmidt use this strategy.
Now, not everything that works for a billionaire will work for the average Joe, but these basic financial principles will. Whether it’s paying bills late or ignoring your credit score, these bad habits have a profound impact on your life. Break them to see a positive effect on your bank balance.