Bad Financial Habits You Should Break

Leah and Roland discuss some financial habits you should consider eliminating. Mindless spending, paying for subscriptions you don’t use or when was the last time you calculated all the money you spend on eating out? Find out how breaking these financial habits could set you ahead for your financial future.

Here are some habits you should consider eliminating.

Financial Habit #1 – Making late payments

There’s more to late payments than simply paying a fee. Missing payments can also lower your credit score, which affects your ability to borrow money for bigger purchases, like a home or car, in the near future.

Never miss a bill again by setting up automatic payments online for fixed costs such as cable, internet, and insurance. For expenses that can’t be paid online, such as rent, set up calendar reminders and pay them at the same time each month so it becomes routine.

As self-made millionaire David Bach writes in “The Automatic Millionaire,” automating your finances is “the one step that virtually guarantees that you won’t fail financially.”

Financial Habit #2 – Paying the minimum on your credit card balance

Most credit cards only require you to pay 1% to 3% of your balance each month. Paying the minimum can be a tempting option, especially if your budget is tight, but it will cost you a fortune in the long run.

As Bach explains, paying off an $8,400 balance (the amount the average American owes in credit card debt) on a card that charges 18% would cost you $20,615 in interest. “You cannot become an Automatic Millionaire if you run up credit card balances and pay only the minimum due,” he writes. “All you’ll accomplish doing that is making the credit card company rich while you stay poor.”

In 2020, get in the habit of making payments in full. The easiest way to do that? Arrange to transfer the full amount of money you owe from your checking account to your credit card company every month.

Financial Habit #3 -Using an out-of-network ATM

It’ll cost you a record high of $4.57 to withdraw money from an out-of-network ATM. There’s no reason to continue paying these fees, which can add up significantly over time.

A simple 2021 resolution: If your bank’s logo isn’t on the ATM, don’t use it.