Five bad financial habits — and how to break them
By Steve Gagnon
‘Tis the season of resolutions of hope and optimism. People promising that with the fresh start of a new year they are going to make meaningful changes in their lives. This is the year. Really. 2012 is going to be different! Sound familiar?
Here’s the thing. Figuratively speaking, in life, there’s no such thing as fresh starts or blank slates. We make resolutions for a reason‚ we’ve got baggage.
Take financial resolutions, for instance. For those of us who have resolved to manage our money better in 2012 (one in three Americans did), we’re not doing it because we’re good at it. We’re doing it because we either mismanage our money or our spending is disproportionate to our earnings. And there’s nothing magical about the stroke of midnight on New Year’s that changes that. The ledger doesn’t reset to zero. Our bills don’t disappear. And most important, our lifetime of action does not get erased.
The bottom line: there is nothing you can say that will help you save money. Resolutions are just words. Distant goals. But there is plenty you can do. And it starts with changing your behaviors.
If we’re really serious about saving more money, we need to identify what keeps us from doing so.
The following are five common reasons people get into financial trouble, and some tips for making change.
• Impulse spending. Make a list of what you need to purchase and stick to it. There’s no such thing as a deal that’s too good to ignore. And if you see something you absolutely must have, walk away (leave the store or browse to another website) and think about it. Chances are, you’ll change your mind.
• Late payment fees. Add bill due dates to your calendar or set up automated online payments. If you’re going to send a check in the mail, schedule to send it at least seven days before the due date.
• Overspending. Start tracking your spending. A daily spending diary or spreadsheet that documents what you purchase, when and why will help you get a handle on where your money is going. Once you know what you spend you can start working on a budget.
• Overpaying. Comparison shop. Go to other stores or look online for better deals. Read reviews to ensure that you’re getting the value you’re paying for. If you’re shopping online, consider shipping and restocking fees.
• Ignoring your accounts. Regularly monitor your account activity and track your budget, transactions and account balances. Knowing this information will allow you to avoid any unnecessary fees, such as overdraft. It will also ensure that unauthorized purchases get detected and addressed.
Resolutions are really about breaking habits and changing behaviors, which is hard to do and why people don’t stick to them. But it can be done. The tips above will help primarily because they are manageable. So instead of setting a goal to save money, resolve to identify what bad habit keeps you from achieving the goal of saving money. Then make breaking that habit your goal.
Share your goal with the people in your life who can help influence your actions — for the positive or negative. If you’re in a relationship and share finances, set goals together and hold each other accountable for achieving them.
The most important thing to remember is that changing behaviors and breaking habits is not about pain and misery. It’s about creating desired outcomes. So make it fun. Create incentives or challenges for yourself. Whatever it takes to motivate you. The more success you can create for yourself the more motivated you will be — and the more financially independent you will become.
Steven Gagnon is a senior vice president and oversees KeyBank’s Aroostook County operations. His office is at 480 Main Street in Presque Isle, and he may be reached at Steven_L_Gagnon@KeyBank.com or 764-9419.
