The soundness of your spending habits can only lead two ways - to a growing portfolio or to debt disaster. Avoiding the following bad habits altogether or taking the time to recount financial missteps that have been made along the way will save money and stress down the road or point the way towards financial health.
1. Living beyond your means. It's a lot easier than many people think. Spending more money than what you make is a way of life for the financially reckless. Doing so repeatedly can leave a gaping hole in finances - a hole that needs to be filled from somewhere, such as dipping into savings, using credit more often, or borrowing from others. Before too long, those sources will be exhausted as well. Anyone who wants to bring their spending under control must have a financial plan that helps them live within their means.
2. Purchasing consumable goods with credit cards. Some individuals use credit cards to make everyday purchases such as gas and groceries, pay utilities, and pay the balance off each month. The individuals have a spending plan in place and are disciplined in paying the monthly balance. Unless you are someone who can do the same, avoid paying for consumable goods with credit. It's too tempting to not pay the bill for things that have already been consumed.
3. Choosing to live without a budget. It's a term many consider tedious and unnecessary, but nearly anyone can benefit from some sort of budget, or spending plan. Especially in a tight economy, it's necessary for most to budget for future unknown expenses, since they are certain to come around. Think of a budget as a method of telling your money what to do as a way of putting a surplus aside for the rainy days.
4 Paying for items with credit when you have the cash. It might be tempting to hold on to the cash when making small purchases, but using a credit card for such purchases may lead to a "something for nothing" mindset - receiving the goods but feeling like you didn't have to pay for them. However, it may be tempting to not pay for them tomorrow as well (especially if they are consumable items). At that rate you may end up paying even more with interest tacked on.
5. Relying too heavily on balance transfers. While the idea of transferring high-interest card balances to lower-rate cards is an effective idea in theory, the key is to avoid putting additional charges on the card and paying off the balance before the introductory rate expires. Unfortunately, most people continue to charge and end up with more debt. Another factor to be wary of is that some cards apply a different rate to new purchases. Make sure to read the fine print every time.
6. Making late credit card payments. It seems like no big deal - a $49 late fee here and there. But that's another $49 that could have been applied to the balance. More importantly, a payment received 30 days past due can cost you much more as your interest rate is increased and puts your account into default. If the payment is going to be late, contact the creditor and ask them to wave the late fee. Make sure the information shows up correctly on your credit report.
7. Forgetting to pay yourself first. As mentioned above, failure to plan for emergencies can bring about real financial disaster. It may only take one incident, such as a car accident to create a heaping pile of debt. You work hard for your money. Make sure to pay yourself. Consider using an online banking savings account with direct deposit to build a stash of cash in your online banking account. Online banking accounts often pay out higher rates. The money is still accessible but because it's harder to get your hands on, it's a solid choice for building up savings.