Financial wellness is a lot like physical wellness, if you cultivate good habits the more likely it is that your finances are in good condition. You contribute to your retirement accounts, keep an emergency savings fund on hand, and work hard to pay down debt.
But, also like physical health there are some common behaviors that may seem small, but can significantly impact your financial wellness over time. From avoiding opening a bill, to splurging on your nights out most of us are guilty of a few bad financial habits.
Below you’ll find a few common money mistakes, tips to help you avoid them, and ways to create a foundation of positive financial decision making now, and throughout retirement.
4 Common Money Mistakes
There are a few common scenarios we tend to fall into time and time again with our money.
1: You Play Victim to Your Debt
If you keep telling yourself you’ll never get out of debt, it can make it much harder to overcome. If you’re convinced the task is impossible, you’ll put less effort into trying to do anything about it.
2: You Don’t Plan for the Future
The earlier you start saving, the harder your money will work for you. It can be tough to think about retirement in your 20s and 30s, but putting a small – but consistent – amount in retirement savings every month through your early adult years could translate to thousands more you’ll have to withdraw in your 60s and 70s.
3: You Aren’t Prioritizing Properly
One of the hardest things to do when it comes to improving financial wellness is to strike a balance between your needs and wants of today with the financial security of your future. When you’ve got your own retirement to think about, aging parents, and kids headed off to college – how do you know what to spend and where?
Prioritizing your finances properly typically requires the help of a knowledgeable financial advisor who can help you stay focused and organized.
4: You Don’t Have a Distribution Strategy
Saving enough for retirement is really half the battle. The other half? Distributing your retirement income in an effective and tax-efficient way. Heading toward retirement with no distribution strategy in place could create unnecessary tax burdens and financial distress.
Conquering Bad Behaviors
Conquering bad (or unproductive) financial behaviors takes persistence and self-discipline. There’s no quick fix, and you should expect changes to be gradual. Below are a few of our tips for conquering bad behaviors that may be affecting your financial wellness.
1: Be Mindful With Spending
With online shopping and contactless pay, buying is easier than ever. This, unfortunately, can make it easy to be impulsive and unintentional with your spending. Before a purchase, take a step back and determine whether or not the purchase is in-line with your greater financial goals.
2: Don’t Let Financial Paperwork Pile Up
Avoiding a bill or bank statement doesn’t make it go away – but it does increase the chance of you incurring late fees and penalty charges. If you aren’t already, get financially organized with your statements and other financial paperwork. Work on conquering any anxiety you may have surrounding unpaid bills or bank balances, and remember that ignoring them will only make it worse.
3: Create an Emergency Fund
By creating and contributing to a savings account regularly, you can save your future self headaches and financial worry. Remember to boost your emergency savings. In fact, adding to your savings account should be a top priority in your monthly budget.
4: Make a To-Do List
The truth is, there’s almost always something you could be working on when it comes to boosting your financial wellness. Reviewing insurance coverage, updating your will, outlining future goals… the list can continue on indefinitely. If it feels overwhelming, start writing down everything on your financial to-do list. From there, prioritize tasks that should be taken care of now and make a game plan for those you can work on later down the line. Breaking it down and crossing one thing off your list at a time can help make financial wellness much more manageable.
While it can be difficult to break old financial habits, it’s certainly not impossible. Finding financial wellness is a constant work in progress, but identifying your own areas for improvement and implementing small changes can yield impressive results. It’s important to ask your financial advisor for help as well. Tell them what bad behaviors you’d like to break, and they can help determine the most effective way to do it.
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This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.