In today's world, it's easy to be left with an empty bank account, confused and wondering where your money went. If you're like most people, your daily spending habits aren't helping you. Here are five everyday habits that end up leaving you poor:
1. Spending More Than You Have
When you spend money that you don't have, you put yourself in a hole. This is why credit cards are a terrible idea if you can't pay them off quickly. The average annual percentage rate for a credit card fluctuates between 14 and 15 percent. Charging just one $100 meal per month means you're going to spend close to $200 in fees.
Credit card spending has an even more profound effect though. As you charge more and more often, your monthly payments continue to increase. Unless you're making more money, these payments take even more money out of your pocket, forcing you to charge more often. It's a vicious cycle, in which it is easy to fall. The best way to avoid it is by never charging something that you don't really need.
2. Letting Daily Indulgences Add Up
Small daily purchases add up quickly. You may stop by Starbucks to grab a coffee every day, but $5 here and $5 there adds up to about $150 a month. Even if you go every other day, your caffeine fix will eat a hole in your budget.
If you have the extra money, there's no problem with indulging in an occasional treat. If you don't have money to build your savings and pay down your debt at the same time, your money is probably better spent. In the future, you'll be able to afford all the coffee you want.
3. Buying Things You Don't Even Use
Spending money on things you don't need is one of the quickest ways to drain your bank account. Sometimes, we buy things that we never even use. How many outfits, books, or trinkets do you own that still have the price tag weeks, months, or even years later? Unless you need something, right away, it's better to wait to make a purchase.
An even worse epidemic is paying for something you don't use on a monthly basis. For example, many people sign up for the gym in January, and then continue to pay throughout the year even though they never return. Likewise, online services such as Netflix, Hulu, and Spotify charge a low monthly fee, but those costs add up. Even $9.99 a month amounts to more than $100 per year.
4. Paying Too Many Fees
The worst part about not having money is being charged for it. Not maintaining a minimum amount in your checking account often results in a monthly fee. If you overspend and end up overdraft, the bank charges between $25 and $40. Even hitting the ATM machine to grab extra cash can cost up to $5 after all the fees.
Stop giving your money to the bank. Track how much you spend and avoid fees at all costs. If an overdraft charge hits, call the bank. It will often waive the first or second fee as a courtesy if you've been a good-standing customer for a while. It never hurts to ask.
5. Not Paying Attention
The easiest way to let a money problem spiral out of control is to ignore its existence. You may think you aren't wasting money on small daily purchases, credit card interest, or things you aren't using, but these are all easily overlooked. If you want to start saving money immediately, you need to take the time to write out a detailed budget. To start, you need to know how much money you have coming in every month and the total amount of all expenses. Examine each expenditure to see if it's necessary. If you can identify four or five ways to save just $10 each month, you'll have a lot of extra money at the end of the year.
Here are some examples to consider:
- Check your cable bill to see if you're paying for extra channels that you don't watch very often.
- Start using Wi-Fi on your cell phone and switch to a plan with less mobile data.
- Save money while grocery shopping by using coupons and switching to the store brand wherever possible.