Bad habits with money can have a range of consequences. Engaging in a simple guilty pleasure every now and then probably won’t hurt your bank account, but racking up credit card debt sure will. And like all bad habits, you need to understand which ones you can live with and which ones need to be squashed. Here are six bad money habits to kick as soon as possible.

If you need assistance with your finances, work with a professional financial advisor from Good Life Financial Advisors of Mt. Pleasant. We’re ready to help create a personalized plan for your specific needs.

Having No Budget

The foundation of any financial plan is an attainable budget. You don’t have to track all your spending to the penny, but knowing where your money goes every month is crucial when trying to get on top of your finances. Do you know how much you spend on eating out each month? When was the last time you tallied up the cost of your streaming services? It’s important to set limits you know you can maintain. If your budget is too strict, you’ll struggle to stick with it.

Carrying Credit Card Debt

You know why credit card companies can so easily offer cash-back matches and free travel rewards to their favorite customers? Because those customers aren’t really their favorite—the ones carrying a balance month-to-month and paying more than 20% in interest are the true favorites of the credit card companies.

Overusing credit cards is one of the easiest ways to fall into a never-ending cycle of debt because the interest penalties are so absurdly high. If you find yourself stuck in this cycle, break out if it by paying off your credit card debt with a personal loan. You’ll still be in debt, but it’ll be much easier to manage.

Overpaying for the Big Items

Ignore those who chide you for buying a coffee or take-out for lunch on Fridays—there’s always a space in the budget for treating yourself to a small pleasure. Real financial problems occur when we get in over our heads with big picture items, like buying a bigger house than you need or taking out a 7-year loan for a car because you really want it. A weekly latte or cheesesteak isn’t going to ruin your financial future, but an unaffordable mortgage very well could.

Neglecting to Plan for Retirement

Father Time creeps up on us all, and eventually, the time will come when a life of 40-hour workweeks are no longer feasible. Social security provides a cushion for retirees, but it might not be enough to achieve all your post-work goals. Planning for retirement should begin as early as possible to take advantage of the market and compound interest, but there’s no bad time to get started. The only bad decision here would be having no plan at all.

Ignoring the Stock Market

If you’ve ever watched a poker game on television, you’ve probably heard the expression “scared money doesn’t make money.” Playing too conservatively at the poker table is a good way to find yourself heading to the exit earlier than you’d like. Similarly, there’s risk involved in putting money in the stock market. However, with time and history on your side, ignoring the market is perilous. Inflation eats away at the purchasing power of cash over time, and fixed income securities alone may not be enough to make up the difference. U.S. markets have gone up between 10 to 11% annually on average over the last 100 years. You won’t find that type of return from any savings account.

Failing to Prepare for the Unexpected

Even the most meticulous financial plan can be derailed by an unexpected expense—an accident or illness resulting in hospital stay, the loss of a job or income stream, or a natural disaster damaging our property. No one can predict the future, but we can prepare ourselves for emergencies. One of the best ways is to have an emergency fund with at least a month or two of expenses saved up. Additionally, make sure you have proper insurance for your home, vehicles, and health. Accidents happen and you don’t want to risk your financial future by skimping on car, homeowners, or renter’s insurance.

Work With an Experienced Financial Advisor

It’s important that you kick these six bad money habits as soon as possible! If you have any questions or need help with your finances, don’t hesitate to reach out to a team member from Good Life Financial Advisors of Mount Pleasant today.