There is always a reason why we save too little and have too much debt. People lose their jobs, the economy takes a nose dive, and getting a raise is almost impossible.
What people don't realize is that we are often our own worst enemy when it comes to our financial circumstances. Everyone is guilty of the occasional spending slip up, and sometimes it's hard to recognize that it's happening more than we'd like to admit.
Here are four spending habits that will not only kill your budget but will also set you up to fail financially.
SPENDING MONEY BECAUSE YOU ARE BORED
I like to call this “zombie” spending. Most of the time, you don't even realize you are doing it. It's so easy to head to the mall, go out to eat, or spend some time browsing your favorite online store, which you almost always get sucked into buying things you don't need. Everything becomes a distraction to fill our time when we don't have anything better to do.
Believe me; I know “zombie” shopping all too well. One of the biggest challenges I faced was online shopping. It's so easy to be laying in bed, checking your Facebook, and get scammed into checking the email you just received from your favorite online store with the message “Flash Sale! Everything 30% off!”
The result is you end up having ten things delivered to your front door that you don't need, and a huge credit card bill to match.
The number one thing that helped me kick the “zombie” shopping habit was to unsubscribe from all the store's emails. The easiest thing you can do is to stop the temptation. Sites like Groupon and apps like Ibotta are great, but not if they are making you spend money you don't have.
Look for other ways to distract yourself. Try picking up a new hobby that you can do from home, or join a book club. After discovering my love for hiking, I feel more rewarded from a day of exploring the outdoors than I did from spending out of habit.
SPENDING MONEY YOU DON'T HAVE
This spending habit comes in many different forms. Your tax return, an expected bonus or raise, or even self-employment income can all fall into the category of money that you might not have. These things are not guaranteed income, yet, people depend on them. People already plan out what they are going to spend this money on without knowing if they will actually receive it.
Have you ever thought to yourself, “I will use my tax refund to buy that.” This is the perfect example of spending money you don't have. Maybe you put the purchase on your credit card, thinking you would pay it off with your tax return, only to find out that you actually owe the IRS. Now you have a credit card balance with no way of paying it off. The same is true with work bonuses.
The best thing you can do is not think of this money as guaranteed income. You should also never include work bonuses or an estimated tax refund in your budget. That way, if you never receive it, you are not so deep in a debt hole that you can't climb out of it. Instead, if and when you receive this type of money, use it to reach your financial goals of paying off debt or increasing your savings.
Credit card debt is another great example of spending money you don't have. The most appealing thing about credit cards is the ability to pay later for items that you can receive now. The biggest mistake is using credit to purchase “ordinary” things like gas or groceries.
You can't rely on credit cards if you don't have them with you. I went almost a full year without any credit cards in my wallet. It's okay to have a credit card, but it's not okay to have a credit card that you are constantly using because you don't have the cash to pay for things. Rely only on your income, and never spend more money than you make. If you decide to use your credit card to make a purchase, make sure you can pay it off in full every month to avoid interest.
SPENDING TO IMPRESS
“We spend money that we do not have, on things we do not need, to impress people who do not care” – Will Smith
It's easy not to care about impressing people whose opinions you don't care about, but it seems like life or death when you want to impress someone you do care about. Maybe it's a friend, someone you want to meet, a coworker, or family. Whoever it might be, let me be the one to tell you that spending money you don't have to impress someone is not worth it. The funniest thing about these situations is that the person you want to impress is probably so busy trying to impress you that they don't even notice all the things you bought to impress them.
A generous heart, kindness, hard work, dedication, and true intentions are far more likely to impress someone than possessions.
Focus on who you really are, and you won't have to spend a dime to impress someone. Stop comparing yourself to others and learn to appreciate what you already have.
What spending habits are you guilty of?