We know you’re doing your best with your money.Sometimes, however, even the best intentions can lead us astray. With every cocktail you order at the bar, and every minute that you spend browsing the web on your mobile phone, you put your finances at risk.
Don’t believe us? We’ve got proof.
These eight seemingly innocent daily moves could be jeopardizing your financial health. Are you guilty of these habits?
You’re one of roughly 20 million Americans who move each year.
That figure comes directly from U.S. Census statistics, and since each move is often prompted by a life change, like getting married or having a baby, we often end up spending money on things we don’t anticipate. These purchases can run the gamut from a big-ticket item, like a new car, to small electronics, like a navigation system to help you get around your new neighbourhood. Of course, many of these expenses will be unavoidable, which nicely brings us to our next point …
You still don’t have a savings account.
In June 2012, Bankrate found that the number of people with zero emergency funds rose to 28% from 24% in 2011. You probably know by now that you should have six months’ net income set aside in case of an emergency, and establishing that savings is easier than you think. “If you have an employer that can split out the amount that you are taking home, and force-feed savings into an account that is out of sight and out of mind, that’s one of the best ways,” Elliot Herman, CFP®, tells Bankrate. And even if your employer doesn’t offer it, your bank likely does.
You can’t fathom downgrading.
Despite a bad economy, a survey by STORES Magazine found that many of us are unwilling to give up “needs” like satellite TV and a professional haircut for the sake of saving some dough. (We are, however, more inclined to give up such luxuries as designer jeans and dining out.) Still, it’s worth downgrading your cable service to see how much you can save. If you truly can’t handle it, you can always reinstate your service.
You like to party.
It turns out that having a few at happy hour can hurt your wallet beyond the three rounds that you bought for your co-workers. While studies show that people often shop online at night, lowered inhibitions from imbibing increase your chances of making an impulse purchase—and retailers know it. “Post-bar, inhibitions can be impacted, and that can cause shopping, and hopefully healthy impulse buying,” Andy Page, the president of Gilt Groupe, told The New York Times. In fact, the company added more sales at 9 p.m. in response to increased site traffic at that hour.
You spend too much time on your mobile device.
Given how many hours we tend to wile away on our smartphones and tablets, it’s not surprising that more than half of us believe our mobile devices spur us to spend more. And, truth be told, many of us do—to the tune of $204 a month on apps and downloads alone, according to a recent poll conducted by the American Institute of CPAs. Sounds like taking the occasional break from technology could benefit your wallet as much as your eyes.
You don’t pay attention to your paycheck.
Seven in 10 Americans are adjusting their spending to accommodate recent payroll tax changes, according to the National Retail Foundation. Are you one of them? If not, you should be, since your paycheck could have decreased by at least 2%. While that doesn’t seem like much, it adds up by the end of the year. And if you don’t adjust your spending habits, you’re more likely to find yourself at a loss—if not in debt—by year’s end.
You don’t use cash …
It sounds like advice your father would give you, but it’s a fact that’s been proven by multiple studies: People who pay in cash spend less. Why? When paying in cash, you have to physically part with the money. Of course, you don’t have to use cash all of the time, but giving yourself a budget for cash purchases toward a week’s worth of lunches or coffee runs can help you keep better track of your cash flow. (As an added bonus, you’ll also wind up healthier—a study in the Journal of Consumer Research found that paying in cash limits impulse food purchases.)
… And you have too many bank accounts.
At the end of the day, having just one account will keep more pennies in your pocket, researchers found. According to a study in “Organizational behaviour and Human Decision Processes,” people who made payments from a single account spent 10% less than those who had multiple ones.
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