Whether you’re trying to get out of debt, hoping to save more this year, or you simply want to make smarter financial decisions, it’s a great idea to get started right away.
Many people struggle with saving money because they have a lot of debt, or they don’t pay attention to their money. There are many ways of thinking about money that can get you in trouble, and can make it difficult to move forward in a beneficial way. Here are 10 dangerous ways to think about money that you should be sure to avoid.
1. I can save later
You can save later, but waiting won’t benefit you in most situations. The sooner you start saving, the more time you have to build up interest, and to prepare for the future. Also, although in theory many people make more money as they spend more time in their career, you can’t guarantee what the future holds. You may face a job loss, an emergency that wipes out your savings, or even a medical problem that stops you from working. Your best bet is to save as much as possible now. According to Scott Holsopple, writing for US News & World Report, graduates should start saving immediately if they have a job.
2. I’m already in debt, so I might as well keep spending
Thinking about debt the same way you think about food (or any other thing that can become a vice) is very dangerous. It’s easy to convince ourselves that if we are already eating too much, we might as well keeping eating. The same is true with spending money. If you are already receiving calls from debt collectors, all of your credit cards are maxed out, and you can’t afford any of your bills, then it might seem like there’s no reason to stop spending now. However, the more money you spend, the harder it will be to get out of debt.
Instead of spending recklessly, try contacting your loan companies to make a deal. It won’t be easy, but according to CreditCards.com, it is possible to negotiate a partial settlement or a longer pay schedule.
3. I can just keep borrowing money
You won’t be able to take out endless loans. If that was possible, many of us would choose to go to school forever and never work, or we would all have mansions and 10 cars. At some point, especially if you can’t pay your bills, you won’t be able to take out any more loans. You may be used to relying on family members or friends to bail you out, and it is possible that they will never turn you down. However, you don’t want to go through life owing other people money indefinitely; it will slowly destroy your relationships and your own self-confidence.
4. I can afford to loan out money
Loaning out too much money to other people can hurt your finances as much, or more, than borrowing money. Unless you have a written contract, you have no guarantee that other people will pay you back (and possibly not even then). Even if you have a ton of money, it’s important not to keep loaning money out indiscriminately. Make sure that you are carefully considering who asks you for money, and whether you should give it to them. Helping others is great, but not if it ends up being at the expense of your own savings or retirement. Don’t assume that lending to friends or family is going to work out well either.
5. Impulse buys are worth it
No, they are not. It really is that simple. Unless you are purchasing something that is necessary or is genuinely going to improve your life, then you shouldn’t waste your money on impulse buys. Impulse buys are often cheap (think a dollar store or a candy bar in the check out line), but they add up over time. If you spend an extra $3 on impulse buys each time you go to the store, you’re looking at $12-$25 minimum each month. Impulse buys can wreak havoc on your budget over time.
6. I don’t need a budget
Speaking of budgets, if you don’t have a budget, or you aren’t following your budget, then you are not thinking about money the right way. A Gallup poll found that less than one in three Americans prepare a detailed budget each month. Completing a budget helps you to save money, pay your bills on time and appropriately, and helps you to make sure you aren’t spending too much money on things that you can’t afford. If you want to have a secure financial future, completing a budget (and following it carefully) is an absolute must.
7. I don’t need an emergency fund
Many people don’t think they need an emergency fund. They rely on their savings account, medical insurance, or friends and family in times of trouble. However, this isn’t a good idea. You should have several months of expenses saved in case you lose your job, have to purchase a new car, or you face another kind of emergency. Your savings should be separate from your emergency fund, and expecting that someone else will bail you out isn’t responsible. According to The Vanguard Group, having an emergency fund can keep your stress levels down, stop you from spending money on a whim, and keep you from making poor financial decisions.
8. I deserve whatever I want
Don’t get caught in the entitlement trap: If you tell yourself that you deserve whatever you want (or even a specific thing) it’s easy to justify buying pretty much whatever you desire, deciding to save later, and even deciding not to pay your bills. While it’s a good idea to leave some money in your budget for fun, believing that you deserve a fancier car, a bigger house, or even a vacation without properly planning and saving for the expense will cause you to go deep in debt or neglect your savings.
9. Goal setting isn’t necessary
As a society, we are taught to be very self-reliant, and sometimes that means we don’t think that we need to ask for help or set goals in order to achieve what we want. However, setting goals can really help you to change your financial spending, save more money for the future, and make smarter decisions now. Try to set realistic goals: According to Wells Fargo, make goals that you can achieve, that are specific, and are measurable. Also be sure to identify your time frame and keep track of your progress. You can even reward yourself in a small way when you achieve those goals.
10. I can do it by myself
Some people have the training, or the natural financial savvy, to make smart financial decisions and choices without the help of other people. However, there’s nothing wrong with asking for help. If you are deeply in debt, you simply don’t know how to budget properly, you can’t control your spending, or you don’t know how much you need for retirement, then your best bet is to ask for help now. You can ask a financially savvy friend or family member, or even see a financial advisor if you feel more comfortable. You don’t have to be rich to seek help from a financial advisor; you can consider an online advisor or save money in other ways.