5 Financial Habits to Break - Adviser Investments

5 Financial Habits to Break

In sports, even the flashiest of moves or the cleverest strategies won’t help you win if you haven’t taken the time to master the fundamentals. Likewise, even savvy investors fall victim to certain pitfalls when it comes to managing their finances.

Addressing these bad habits can help you build a stronger financial foundation:

  1. Not budgeting. Many people have a clear picture of major monthly expenses, like their mortgage and car payments, but are surprised to find how big a bite all the “little things” take out of their wallet. For example, spending $15 on lunch at work every day will cost you about $3,900 a year. Creating a budget helps you develop a clear picture of your cash flow and prevent overspending. (Click here to read more on budgeting and download a copy of our Budget Worksheet to help you get started.)
  2. Not saving for emergencies. Fender benders, basement floods, the odd root canal—such unpleasantries happen to us all eventually, but many of us aren’t financially prepared for them. We recommend keeping three to six months of living expenses in savings to help cushion the blow of a lost job or major medical emergency.
  3. Not paying off your credit cards. If you don’t have a clear picture of your cash flow, it can be all too tempting to simply carry over your credit card balance to the next month rather than risk an empty checking account. Keeping credit card balances with high interest rates can cost thousands in fees over time. Spending according to your budget, lowering your balances over time (once you have an emergency fund) and working toward paying your cards in full each month will boost your credit score, allow you to take advantage of credit card incentives and ultimately save you money.
  4. Not having a financial plan. A budget on its own isn’t enough to help you achieve your financial objectives. A financial plan serves as a roadmap, helping you pinpoint your goals, get the most from your assets and identify gaps and weaknesses. You can’t put a price on knowing where you want to get in life and having a clear path to get there—a good financial plan can help bring you that peace of mind.
  5. Not talking about your finances. Finances can be a difficult topic to broach with loved ones; making sure you and your partner are on the same page about types of debt, spending habits, current assets and financial goals is important. We can help you get the conversation started if you feel stuck or would like some guidance.

If you’d like to talk more about your financial plan or need help breaking any of these habits, give your wealth management team a call. We’re happy to help.


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