FORUM Credit Union's website works best with JavaScript enabled

The top 5 behaviors to avoid in 2016 for financial success

Being in financial distress is not always related to a single event. Many times it is the impact of minor bad decisions over a long period of time that can be the cause. There are five financial habits that can be very detrimental to your long term financial success.  Changing these habits will make a dramatic difference financially.  The five habits to change are: having an expensive daily habit, irresponsible credit card use, buying a car every two years, making many small purchases instead of one large purchase and the number one habit to change is using “hoping for the best” as your financial planning model.
What is an example of an expensive habit?
Two examples come to mind, smoking or the extra- large latte that you just have to have each day.  Either can cost you from $7 to $10 per day which is $2,500 to $3,600 per year.  Putting that into perspective, that’s $25,000 to $36,000 over ten years
Are there any other costs besides paying for the habit?
For a habit like smoking, there are other costs such as higher life insurance premiums sometimes as much as three times the rate for a non-smoker.  Additionally, there could be additional health insurance costs due to medical conditions caused by smoking.
How do we control the bad habit of irresponsible credit card use?
Start by limiting the number of cards you carry.  Have a primary card that you use for daily use that you can pay off in full each month.  Set a budget for the amount you will charge and stick to it by using daily balance alerts to keep you informed on your current balance.
Why is making several small purchases not a good financial practice?
When we spread our purchases out over several transactions, we don’t really grasp the amount of money we can spend in a week.  Plus, when we buy a few items at a time, we are more likely to add in a few extra purchases that we don’t need. 
Why is this habit so detrimental to financial success?
The net of this behavior is that at the end of the week, we have spent way more than we really planned and yet didn’t realize it because it was $20 or $30 at a time.  It is financial death by a thousand strokes that mostly go undetected by those caught up in this habit.
Why is buying a new car less than every 2 years a financial mistake?
If you buy brand new cars every two years or less you are typically paying more for the car each time which means your monthly auto payment keeps going up ever so slightly and in a few years, your auto payment is considerably more than you really should have.  Also, you will be paying more for insurance than you would if you drove your car just twice the amount of time.
How do we overcome the number one habit related to financial planning?
Educate yourself about financial planning and become aware of your current financial situation.  Work with a professional to develop a plan to help you achieve your lifetime goals.  Just a little planning and financial awareness can make a big difference in your financial success.
Where do you start if you have all five of the habits to avoid?
Start with the last one.  Budgeting and planning will certainly shed more light on the problems caused by the other four financial habits on the list.  Sometimes we are more motivated when we see the truth more clearly.

Posted: 12/17/2015 with 0 comments

Categories: Money Matters, Planning

Blog post currently doesn't have any comments.
 Security code