5 Small Habits That Are Ruining Your Finances
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You brush your teeth daily, right? This ensures that when you go to the dentist for a check-up, you’re hopefully cavity-free. You should be thinking about your finances in the same way, as your financial health is determined by the little things you do on a regular basis. And when it comes to habits, what you don’t do is as important as what you do.
“Financial success isn’t decided by big dramatic moves, but rather doing lots of small things well over the long term. Just by avoiding mistakes, fixing small bad habits can make a huge impact on personal finance,” says Nick Bormann, Ph.D., CFP®, registered investment advisor and founder of Bormann Wealth Management LLC.
Bormann shared five subtle habits that could be undermining your best efforts to improve your financial situation. Avoid them and watch your bank account grow and your debt go down.
Keeping too many subscription services
There is so much great content out there, and so many convenient services that you can subscribe to with the click of a button. On the downside this means that long gone are the days when your only monthly subscriptions consisted of your Netflix account and gym membership. Subscriptions add up fast these days, and keeping too many is a sneaky yet destructive habit.
“Subscriptions can be very convenient and often each one is not very expensive. But added together, subscriptions will eat up cash flow and leave you wondering where your money went,” explains Bormann.
Financial procrastination
He also adds that financial procrastination is as pervasive as procrastination in other areas of your life – if not more. There is no time like now to bite the bullet and open that unopened bill, start tackling credit card debt aggressively or save $20 a week.
“The time is never quite right to make a change. If you have a resolution, why not start it today? Too often, important goals like saving or reducing debt get pushed back again and again, and the longer you wait, the harder it becomes to get started.”
Checking investment accounts daily
Another small habit to be aware of is the temptation of checking investment accounts daily.
“Short-term moves are mostly noise and irrelevant if you’re investing for long-term goals, but seeing the numbers turn red or green on a statement can trigger impulsive reactions which end up being harmful. Avoid that temptation by logging into investment accounts less often,” recommends Bormann.
Product-driven social media browsing
You probably are already all too aware of the negative impact of excessive scrolling and screen time. But this habit might even be affecting your financial hygiene without you realizing it.
“It’s natural to follow social media accounts which represent our interests, but below the surface, these are also product-placement devices intended to make us dissatisfied with what we have. Consumerist social media becomes the modern ‘keeping up with the Joneses’ and leads to poor spending decisions.”
Fear of missing out
On that note, do you envy your friend’s new car, house or travels? Do you find yourself complaining about others having it easier than you? That FOMO could be harming more than your mood.
“Charles Kinderberger, writing about the history of financial bubbles, said, ‘There is nothing so disturbing to one’s well-being and judgment as to see a friend get rich,’” according to Bormann.
“Everyone’s financial path is different. Comparing yourself to friends who’ve had good fortune and then jumping on the bandwagon too late can lead to losses instead of gains.”
So keep that green-eyed monster in check and focus on everything you do have instead – that feeling of gratitude will lead to better money moves.
Related: 6 out-of-the-box tips to make you feel better about your finances
Some of these habits are so small you aren’t even aware of them, but they do make an impact and could be hurting you. Take this advice, make some small changes and watch the improvements be reflected in your finances.