Avoid These 6 Bad Money Habits to Keep Your Financial Planning on Track

Nov 18 • Financial Planning • 1236 Views • No Comments on Avoid These 6 Bad Money Habits to Keep Your Financial Planning on Track

Ask yourself this question and answer honestly, “Are you mismanaging your money?”

If your spending continues to outpace your earnings, the answer may be “yes.”

At KHC, we help our clients identify their goals, create a plan to achieve those goals and then put that plan into action.  Bad money habits can derail your plan.  To avoid the cycle of mistakes, try to identify these bad money habits and eliminate or at least curtail them. Consider these six common problems:

1. You let emotions rule. Do you shop to relieve stress, escape boredom, or entertain yourself? Do you experience anxiety, guilt, or remorse after shopping? You could be an emotional shopper. The trick is to keep emotions from getting in the way so that you buy only what you need. A possible solution is to make yourself wait a couple of days before making a major purchase.  These will allow you time to determine whether it’s really worthwhile.

2. You feel entitled. Maybe you feel you deserve more than you have regardless of how much you earn or what you own. Why should you be deprived of a top-of-the-line car or your dream house? Train yourself to buy only what you can afford.

3. You crave instant gratification. If you need to get things right away—the latest electronic gadget or designer clothes—you may pay a premium, plus interest on any amount you may borrow.  That could create more debt. If you resolve to pay cash for all your purchases, you may be able to hold back and consider the big picture.

4. Your self-worth is defined by possessions. Advertising pitches are designed to make you believe you’ll be happier if you buy particular products. Remind yourself that you are much more than you own.  The key is to look at prospective purchases in terms of whether they satisfy actual needs.

5. You’ve become complacent. Many people accept the status quo, even if that means mounting debt. Complacency can be dangerous because it lets you disassociate the pleasure you get from buying from the pain you’ll feel when the bill arrives. Realizing that you need to change is the first step toward reversing the course.

6. You don’t have a plan. Sometimes we tend to look at what we earn, spend, and save as separate ideas rather than acknowledging that they’re all tied together.  A wealth manager can help create a comprehensive wealth plan that includes your financial capital as well as your human capital, your time, talent, experience and skills.  Among other things, this can mean establishing a budget, retirement savings plan, emergency fund and career plan.

Make a few important changes and you may see the difference very soon.

For more information, visit our website at www.makinglifecount.com or contact KHC President Matt Starkey at mstarkey@makinglifecount.com or (913) 345-1881.

Photo credit: 401(K) 2013 / Foter.com / CC BY-SA

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