Bad Money Habits to Break in 2013

Behaviors worth changing for the New Year.  – Reeve

Do bad money habits constrain your financial progress?
Many people fall into the same financial behavior patterns year after year. If
you sometimes succumb to these financial tendencies, the New Year is as good an
occasion as any to alter your behavior.
#1: Lending money to family & friends.
You may know someone who has lent a few thousand to a sister or brother, a few
hundred to an old buddy, and so on. Generosity is a virtue, but personal loans
can easily transform into personal financial losses for the lender. If you must loan money to a friend or family
member, mention that you will charge interest and set a repayment plan with
deadlines. Better yet, don’t do it at all. If your friends or relatives can’t
learn to budget, why should you bail them out?
#2: Spending more than you make.

Living beyond your means, living on margin, whatever you wish to call it, it is a path
toward significant debt. Wealth is seldom made by buying possessions. Today’s
flashy material items may become the garage sale junk of 2025. Yet, the trend
continues: a 2012 Federal Reserve Survey of Consumer Finances calculated that
just 52% of American households earn more money than they spend.1
#3: Saving little or nothing.

Good savers build emergency funds, have money to invest and compound, and leave the stress of living
paycheck-to-paycheck behind. If you can’t put extra money away, there is
another way to get some: a second job. Even working 15-20 hours more per week
could make a big difference. The problem is far too common: a
survey of 1,105 households last fall found that 41% of respondents had less
than $500 in savings. In another disturbing detail, 54% of the respondents had
no savings strategy.2
#4: Living without a budget.

You may make enough money thatyou don’t feel you need to budget. In truth, few of us are really that wealthy.
In calculating a budget, you may find opportunities for savings and detect wasteful spending.
#5: Frivolous spending.

Advertisers can make us feel as if we have sudden needs; needs we must respond to, needs that can only be
met via the purchase of a product. See their ploys for what they are. Think
twice before spending impulsively.
#6: Not using cash often enough.

No one can deny that the world runs on credit, but that doesn’t mean your household should. Pay with cash as
often as your budget allows.
#7: Gambling.

Remember when people had to go to Atlantic City or Nevada to play blackjack or slots? Today, behemoth casinos
are as common as major airports; most metro areas seem to have one or be within
an hour’s drive of one. If you don’t like smoke and crowds, you can always play
the lottery. There are many glamorous ways to lose money while having “fun”.
The bottom line: losing money is not fun. All it takes is willpower to stop
gambling. If an addiction has overruled your willpower, seek help.
#8: Inadequate financial literacy.

Is the financial world boring? To many people, it is. The Wall Street Journal is
not exactly Rolling Stone, and The Economist is hardly light reading. You
don’t have to start there, however: great, readable and even entertaining
websites filled with useful financial information abound. Reading an article
per day on these websites could help you greatly increase your financial
understanding if you feel it is lacking.
#9: Not contributing to IRAs or workplace retirement plans.
Even with all the complaints about 401(k)s and the low annual limits on
traditional and Roth IRA contributions, these retirement savings vehicles offer
you remarkable wealth-building opportunities. The earlier you contribute to
them, the better; the more you contribute to them, the more compounding of
those invested assets you may potentially realize.

#10: DIY retirement planning.

Those who plan for retirement without the help of professionals leave themselves open to abrupt, emotional
investing mistakes and tax and estate planning oversights. Another common
tendency is to vastly underestimate the amount of money needed for the future.
Few people have the time to amass the knowledge and skill set possessed by a
financial services professional with years of experience. Instead of flirting
with trial and error, see a professional for insight.


This material was prepared by
MarketingLibrary.Net Inc., and does not necessarily represent the views of the
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information to you. All information is believed to be from reliable sources;
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note – investing involves risk, and past performance is no guarantee of future
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construed as investment, tax or legal advice and may not be relied on for the
purpose of avoiding any Federal tax penalty. This is not a solicitation or a
recommendation to purchase or sell any investment or insurance product or
service, and should not be relied upon as such. All indices are unmanaged and
are not illustrative of any particular investment.



– [10/23/12]

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