Scary Money Habits and How to Improve Them

Some people have great money habits that help them save and invest for the future, while others have scary money habits where looking at their bank account makes them feel like they’re about to enter a haunted house. And there’s good reason for that. Some money habits sabotage financial health. How can you tell? If you’ve been stressed out or struggling to get ahead financially, it might be time to take a look at your money habits and see if there are any changes you can make.

Here are some scary money habits that could be holding you back according to money coaches:

1. The scary impact of impulse buying

We’ve all been there – you see something you want and you buy it, no matter the cost. Impulse buying can be a major drain on your finances, and it’s one of the quickest ways to sabotage your financial health.

If you’re struggling with impulse buying, try these tips:

  • Plan your purchases in advance. Make a list of what you need and stick to it.
  • Give yourself a waiting period. If you’re still thinking about an item after 24 hours, chances are you really want it.
  • Avoid going to the mall or browsing online stores when you’re feeling down or stressed. These are prime times for impulse buying.
  • Think about the long-term ramifications of your purchase. Will this item still be useful to you in a year? Five years?
  • Pay with cash. Studies have shown that people are more likely to spend less when they’re paying with cash as opposed to credit.

2. Not having an emergency fund

An emergency fund is a crucial part of financial stability, yet so many people don’t have one and habitually avoid saving one. An emergency fund is money set aside for unexpected expenses, like a job loss, car repairs, or medical bills.

If you don’t have an emergency fund, you’re in for a world of financial hurt.

Here’s why not having an emergency fund is one of the scariest money habits:

  • You’ll be one unexpected expense away from financial ruin.

An emergency fund is there for a reason – to cover unexpected expenses. If you don’t have one, a small unexpected expense can quickly turn into a financial nightmare.

If you don’t have an emergency fund, you’ll likely have to rely on credit cards or loans to cover unexpected costs. This can get you into serious financial trouble if you’re not careful.

  • You’ll be putting your financial future at risk.

If you don’t have an emergency fund, you’re putting your financial future at risk. A large unexpected expense can set you back financially, and it may take years to recover.

Not having an emergency fund can be extremely stressful. You’ll constantly be worried about how you’ll cover unexpected costs, and this can take a toll on your mental and emotional health.

  • You’ll be setting yourself up for failure.

If you don’t have an emergency fund, you’re setting yourself up for financial failure. Unexpected expenses are a part of life, and not having a cushion to fall back on can be devastating.

If you don’t have an emergency fund, start small by setting aside $50 from each paycheck until you reach your goal. Once you have your emergency fund in place, don’t touch it unless it’s truly an emergency.

3. Habitually living paycheck to paycheck

Like most Americans, you’re probably living paycheck to paycheck. About 78% of us are in the same boat. That means that we’re barely scraping by, financially speaking.

And it’s not a good place to be. Living paycheck to paycheck is one of the worst money habits you can have. It’s a surefire way to stay in debt, making it very difficult to save for the future.

If you’re stuck in the paycheck-to-paycheck cycle, there are a few things you can do to break out of it and it definitely means tackling some of the other money habits on this list. Speaking of…

4. Not tracking your spending

If you’re constantly struggling to make ends meet, it’s time to take a look at your spending habits. Track where you’re spending your money for a month and see where you can cut back. Often, people are surprised to find out how much they’re spending on things they don’t value. In fact, most people underestimate how much they spent monthly on subscriptions, guessing $86, instead of the actual amount was $219 on average.

Once you have a better idea of where your money is going, you can start to make changes to break the cycle of living paycheck to paycheck.

5. Not saving for retirement

It’s never too early (or too late) to start saving for retirement, but avoiding saving at all for retirement is one of the worst money habits. If you don’t have a retirement savings plan, now is the time to start one. Begin by contributing as much as you can to your employer’s retirement plan, like a 401(k). If your employer doesn’t offer a retirement plan, open an individual retirement account (IRA). The sooner you start saving for retirement, the better off you’ll be.

6. Relying too much on credit – another scary money habit.

We’re not talking swiping plastic and one click checkouts. We’re also talking about Buy Now Pay Later programs. Why is relying on credit too much one of the worst money habits?

For one thing, it can lead to a lot of debt. And that’s never good. But even if you’re able to keep your debt under control, relying on credit too much can still be a bad idea.

Here’s why: When you rely on credit, you’re essentially borrowing money. And that means you’ll have to pay interest on that money. The more you rely on credit, the more interest you’ll pay, and that’s actually costing you.

What’s more, using credit can be a slippery slope. It’s easy to convince yourself that you need something when you can just put it on a credit card. But before you know it, you could be buried under a debt pile.

So, to avoid financial trouble, it’s best to not rely on credit and use it strategically. Pay with cash whenever you can, and only use credit when you absolutely need to. That way, you’ll keep your debt under control and save yourself some money in the long run.

7. Avoiding insurance – the paperwork is scary, but habitually not being fully insured is worse

When it comes to money, there are many things people can do to improve their financial situation. One of the worst things someone can do is avoid insurance.

There are many types of insurance, but the most important ones are health, life, and disability insurance. Health insurance protects you from having to pay for expensive medical bills if you get sick or injured. Life insurance gives your loved ones financial assistance if you die. Disability insurance provides an income if you can’t work due to an injury or illness.

Without insurance, you’re taking a big risk. If something happens to you, you could end up with a huge financial burden. In some cases, avoiding insurance can even lead to bankruptcy.

If you don’t have health, life, or disability insurance, now is the time to get it. Having insurance can protect you financially if you’re ever faced with an unexpected illness or injury. There are a lot of different types of insurance, so make sure you’re getting the coverage you need.

8. Not tracking your progress

Avoiding your bank account is one thing, but not tracking your financial progress at all – that’s another scary money habit.

One of the easiest ways to track your financial progress is by calculating your net worth. Your net worth is the total value of your assets minus your liabilities. It’s also a good way to see how your financial situation is changing over time. If your net worth is negative, it means you owe more money than you have. To calculate your net worth, add up the value of your assets and subtract any debts you owe.

There are a few reasons why you should be in the habit of tracking your net worth. First, it can help you see how your financial situation changes over time. This can be especially useful if you’re working towards a specific financial goal, like paying off debt or saving for retirement.

Second, tracking your net worth can help you identify areas where you may need to make changes. For example, if you see that your debt is increasing while your savings are staying the same, you may need to reevaluate your budget and make some adjustments.

Finally, monitoring your net worth can give you a sense of whether you’re on track to reach your long-term financial goals. If you’re not happy with the number, it may be time to make some changes in your life so that you can get closer to where you want to be.

9. While investing is a good thing, investing habitually without a plan is just plain scary.

Investing without a plan is akin to flying blind. You might get lucky and make some money, but more likely than not you could be doing more to reach your financial goals. This is why you should avoid the bad habit of investing without a plan.

A well-thought-out investment plan will map out your goals and how you’re going to achieve them. It will take into account your risk tolerance and time horizon, and help you stay disciplined when markets get volatile.

Asses your long-term and short-term financial goals and see

10. The scary money habit of not negotiating

If you’re not comfortable negotiating, you’re probably leaving money on the table.

Also, if you’re not willing to negotiate, you could be missing out on some great deals. Many businesses are open to negotiating prices, whether it’s for a product or service. So if you’re not comfortable haggling, you could be paying more than you need to.

By habitually avoiding negotiations, you could also be sacrificing your own happiness. Whether it’s your salary or the price of a product, negotiating could help you get what you want. Being afraid to negotiate could mean that you’re sacrificing your own happiness for the sake of avoiding conflict.

Whether you’re negotiating a salary raise or a better interest rate on a loan, learning to negotiate can save you a lot of money.

11. Having unrealistic expectations

Many people have unrealistic expectations when it comes to their finances and the results can be really scary. They think they should be able to retire as early as possible or that they’ll never have to worry about money again. The truth is, financial planning is an ongoing process. You need to be realistic about your goals and be prepared to make changes as your circumstances change. If you have unrealistic expectations, you’re more likely to make mistakes that could cost you money.

12. Ignoring your relationship with money

Whether you realize it or not, ignoring your relationship with money is one of the worst money habits you can have. It’s like having a car you never service or check the oil in. Eventually, it’s going to break down and leave you stranded.

The same is true for your finances. If you don’t take the time to understand your relationship with money, it will eventually come back to bite you. You might end up in debt, or miss out on opportunities to save and invest.

So what can you do about it this surprising yet really common scary money habit?

First, evaluate your current relationship with money.

Think about how you currently feel about money. Do you feel anxious or stressed when you think about it? Do you feel like you’re always chasing after more money? Or do you feel peaceful and content with what you have? Your feelings towards money can give you some insight into your current relationship with it.

Then improve any negative emotions you have towards money.

Do you find yourself getting angry or resentful when you think about money? If so, then it’s time to let go of those negative emotions. Holding onto negativity will only make your relationship with money more difficult. Instead, try to focus on the positive aspects of money.

Next, change your mindset about money.

If you want to improve your relationship with money, then you need to change your mindset. Instead of thinking of money as something that’s scarce or hard to come by, try to think of it as a tool that can help you achieve your goals.

Lastly, one of the best ways to improve seek professional help if needed.

If you find that you’re still struggling to improve your relationship with money, then it might be time to seek professional help. A money coach or financial therapist can help you develop healthy coping mechanisms and make positive changes in your relationship with money. That combined with a money app can help you build a long-term system for managing money.

Just like facing your financial fears and conquering your scary money habits – making changes in your relationship with money can be difficult. But it’s possible.

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