It’s easy to get caught up in the excitement of paychecks and having more money to spend. Seeing them come in on a regular basis can lead to unnecessary splurging. If you aren’t mindful about your finances early, it’s a slippery slope into the territory of overspending and mountains of debt.
Even if you have the best intentions with your finances, bad money habits can easily derail your plans. Here are six bad money habits you need to break now.
1. Spending your whole paycheck.
If every month ends in you eating microwave ramen and frozen TV dinners for five days until you receive your next paycheck, that’s a problem.
You shouldn’t spend everything you make. It’s important to set some money aside every month for your savings account. Additionally, if your job offers a 401(k) matching plan, you should take advantage of it. All that money is pre-tax and comes out of your paycheck before you see it. Plus, if your company matches, it means they’ll put in a dollar for every dollar you put in, too. It’s free money!
2. Living on your credit card.
One of the most common mistakes people make with their finances is relying too heavily on credit cards. Since your credit card limit is often higher than your paycheck, it’s easy to spend beyond your means.
Many people think that as long as they pay their bills on time, carrying a balance won’t affect their credit score. However, the truth is that paying the minimum amount due — even if you pay on time — can hurt your score. Additionally, consistently paying your minimum while continuing to carry a balance will create debt that could take you years to pay off.
If you find yourself living on credit cards, stop using them immediately. Focus on paying off the debt before you spend more.
3. Being lax on utilities.
The utility bills you receive every month from your electric provider and water company are necessities. Too often, we don’t consider the amount of these bills. We pay them blindly.
But energy waste is monetary waste too, and there are things you can do to reduce the cost of your monthly utility bills. Make sure you turn the lights off every time you leave a room, and keep water, heat, and air conditioner usage to a minimum. It’s a small difference, but those dollars add up.
4. Spending emotionally.
When you feel down, it’s nice to treat yourself to an afternoon dessert, a new pair of shoes, or a mani-pedi after work.
However, emotional and impulse spending is a fast track to credit card debt. And the worst part is that while you may feel better for a few minutes, the high fades and you’re left in the same place you were when you started — but with fewer dollars.
Instead of succumbing to every impulse, sit on the idea for 24 hours. If the impulse passes and you still want to buy it, then go for it.
5. Buying lunch (and coffee!) every day.
When you have a busy work and social life, the first thing to go is cooking for yourself. It’s much easier and faster to order in or go out, right?
These seemingly small expenditures — a cup of coffee before work, a sandwich for lunch, Chinese for dinner — can add up quickly. It’s okay to spend a little bit on food every day, but eating every meal out, and splurging on coffee and a snack every day can add up quickly.
Making coffee yourself may not save you a ton of money, but at least it’s something. And what’s important is that you start thinking before you spend those $3 every morning.
6. Overspending on everything.
You may have expensive tastes, but that’s no reason to buy a $1,500 handbag instead of a $200 one. The same goes for clothes, food, entertainment and drinks.
When something cheaper will be equally as functional, it’s important to consider taking a step down. You don’t need to have the highest end of everything. Use your common sense and think before you spend.
These money habits can be hard to break, like any other bad habit, but it’s worth putting some effort into changing them. As you work to change your habits, you’ll notice that your finances will improve significantly.
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