4 Behaviors That Risk Your Financial Security

By Dan Rafter on 8 February 2018 0 comments

Do you consistently spend more than you make? Do you go on shopping sprees to celebrate a raise or to soothe your disappointment at not getting a promotion? Maybe you're constantly charging gadgets or shoes you don't need to your credit card, telling yourself that you'll start whacking away at debt tomorrow.

These are all dangerous behaviors that can damage your financial health. And what's worse, many times we don't even realize how much damage these bad habits are inflicting on our bank accounts.

We all have bad habits. But the key lies in preventing them from turning into missed credit card payments, huge mounds of debt, and low credit scores. Here are four behaviors that could be damaging your financial health.

You're impulsive

Do you give into temptation whenever you see a dessert, even though you've sworn off sweets? Do you immediately purchase that trinket that catches your eye in the check-out lane? You might be a bit impulsive. Impulsive people struggle with discipline, and that can be a real challenge when it comes to building healthy finances.

Here's another example: Instead of waiting a few months to save up enough money to pay for a new laptop, you run out to the store to buy it with your credit card. Now you've added hundreds of dollars to your credit card debt. And this new debt comes with high interest. If you can't pay off your credit card balances in full each month, you'll end up paying much more for that laptop than you would have if you'd simply saved the money first.

How can you beat impulsive spending behavior? Create a monthly household budget. Look carefully at how much money you have left over to spend on extras. If the purchase you're dying to make doesn't fit into the money you have to spend, hold off on purchasing it. And if you do dip into that slush pile, know that you won't be able to spend as much the rest of the month. (See also: 5 Mental Biases That Are Keeping You Poor)

You celebrate, or commiserate, by spending

Did you earn a promotion at work? Did you get passed over for one? It might not matter. You might mark either occasion by spending a big chunk of money.

Some of us spend as a way to soothe our feelings when we're upset, to celebrate when we're glad, or both. This can become a big financial problem when these spending bouts bust your budget.

Learn to recognize what feelings trigger your spending urges. Find some other way to celebrate or soothe your emotions. This could mean calling a friend, exercising, or journaling. If you just want to escape, try watching a fun TV series or reading a good book. Don't let shopping be the only way you deal with emotional swings. (See also: 7 Effortless Ways to Prevent Budget-Busting Impulse Buys)

You let your spending swell as your economic situation improves

What should you do if you get a raise at work? The best financial answer is to take that extra money and use it to boost your savings or pay down high-interest credit card debt. Unfortunately, many of us instead start spending more.

We get a raise and we automatically raise our lifestyle to fit our new paycheck. Maybe we buy a more expensive car. We might start eating out more often. We might upgrade to a fancier TV or a top-of-the-line laptop. But don't start spending loads more just because you've gotten a raise. You'll never build your savings or improve your financial stability if you fall into this pattern.

When you do get a raise, it's OK to loosen your belt a little with a few small luxuries that you budget for. But most of your new income should go to increasing the money you devote to savings or paying off credit card debt. (See also: 9 Signs You're Suffering From Lifestyle Inflation)

You put things off

Are you a procrastinator? This can be a challenging habit when you're trying to improve your finances. For example, you might decide to start paying extra toward your credit card debt but not until the next month starts. In the meantime, because you plan to make improvements the following month, you figure it doesn't matter what you do this month.

The problem is, the extra money you give yourself permission to spend this month only makes your financial health that much worse. And for some people, next month never comes. They don't actually ever start making those extra payments.

If you have a financial goal, don't put it off. Write it down in a location where you can see it every day. And don't give yourself permission to hold off on tackling it. If you keep procrastinating, you'll simply build up more debt that you'll have to tackle anyway. Why not get to it today? (See also: 7 Biggest Ways Procrastination Hurts Your Finances)

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