By Kali Hawlk
You’ve got a fresh start on a new year. Now that we are a few months in, it’s the perfect time to take the opportunity and evaluate your finances.
It’s also a good idea to be honest with yourself and make sure you’re not behaving badly when it comes to your money.
If you want to make this year a better one for your wealth, now is the time to break these 5 financial habits:
1. Thinking It’s Too Soon or Too Late to Start Investing
It’s never too early to start saving and investing. You’re going to have a long, healthy, full life – and the sooner you start thinking about the days ahead, the better you’ll be prepared to finance them.
If you haven’t started investing, start with your employer. Open any retirement accounts they offer as part of your benefits package (like a 401k, 401b, or a Simple IRA) and contribute at least enough to score the employer match (which is usually around 3%-5%). Bonus points if you take initiative and open up a Roth IRA on your own.
On the other hand, it’s also never too late to invest. If you’re in your 30s and 40s, there’s still time for you to jump right into investments. You will have some ground to make up, though, so prioritize.
Aim to save as much of your income as you possibly can and consider doing some work on the side to earn more for your retirement accounts. For more advice, check out our guide to saving and investing.
2. Failing to Track Your Spending
If you don’t know where you’re at financially, it’s going to be hard to figure out where you need to go – and how to get there.
Track your spending (try a service like Moven or Mint), then eliminate the waste and unnecessary costs. Use that money you freed up to pay down debt, add to your emergency savings, or contribute to your investments.
3. Paying Only the Minimums
If you have credit card debt, paying only the minimum required monthly payments is a great way to make sure you stay in debt. It will also prevent you from building wealth.
Paying only the minimums means you’ll pay more (thanks to the interest) in the long run. Get serious, make an aggressive plan, and create payments that are as large as you can afford in order to eliminate your debts ASAP.
4. Giving in to Shopping Impulses
Don’t make the jobs of marketers easy! Say no to the clutter that fills up the racks by the cash register in the store. Ignore flashy advertising, email blasts, and too-good-to-be-true deals (because they are exactly that).
By giving in and making impulse buys, you’re emptying your pockets on stuff and junk that you don’t need. These things don’t add real value to your life – and often you’re just chasing the feeling, not the actual item.
Plan ahead and buy only what you need or what you budgeted to buy.
5. Ignoring Your Financial Documents and Statements
Sure, it can be boring to sift through statements, bills, and information about your credit. But it’s essential that you organize your financial life and keep on top of these documents.
Always double-check bills for mistakes, even if you’ve set up an auto-pay system, to avoid being charged more than you actually owe. Pull your credit report annually (you get a free check once a year) and ensure that what’s been reported is correct.
Keep tabs on your bank accounts to protect yourself against false charges or fraud. Be aware of what you’re assets are doing; plan to go over investment statements quarterly and speak with a financial professional if you have questions or concerns.
It’s not easy to break an old habit – but creating a better financial life for yourself in 2014 is well worth the effort.
This post originally ran on GoGirl Finance.
Kali Hawlk blogs about common-sense financial advice at Common Sense Millennial. She’s passionate about personal finance and helping millennials manage their money and live well on less. Currently, she is pursuing the ultimate dream of writing for a living and moving abroad. You can connect with her by tweeting @CSMillennial.
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