It's still a week until payday, but your checking account is almost empty already. Where did all your money go? We all have our black holes, those money pits that seem to magically make our cash disappear. Here are six bad habits that will make you broke, and how to break them. (For related reading, also take a look at 6 Spending Tips From Frugal Billionaires.)
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- Window Shopping
It can be fun to browse the aisles, and see what's out there. We all have our weak spots, like home goods, electronics or clothes - even if you don't like to go to the mall. You don't even have to leave the house to window shop anymore; those catalogs, the internet and commercials advertising the latest sale can be just as tempting.
Window shopping is a bad financial habit that takes some discipline to break. Staying away from stores and not requesting catalogs or email updates from your favorite stores is a good place to start. Before buying that latest item you pine for, ask yourself two questions: do I need it and can I pay cash for it? If your answer is no, walk away. (For easy tips on saving, don't miss 5 Ways To Trick Yourself Into Saving Money.)
- Carrying Lots of Cash
You know that paying with plastic is bad, but carrying lots of cash can be just as bad a habit. Cash can give you the feeling of having extra - fun money that's just sitting there.
Only carry enough cash for what you need, and leave the rest at home. Avoiding plastic is great, but budgeting is just as important when choosing to pay cash. If you like the green, try budgeting your cash with envelopes: one for groceries, one for entertainment, etc. (Paper or plastic? Find out in Should You Pay In Cash?)
- Saving Your Info With Vendors
Those online shopping sites are so considerate to save your address and credit card information - some even have one-click ordering buttons, so you can buy something in just a second. It's very easy, but also very dangerous. Not only does this easy shopping make you broke if you're prone to impulse shopping, it also eliminates the feeling of spending money, since all you do is click.
Don't allow vendors to store your credit card information. Avoid signing up for emails and catalogs if those tempt you to shop when you really shouldn't. It can be great to know about a sale, but if you didn't need anything, it's just another temptation.
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- Clipping Unneeded Coupons
We all feel the pinch in this tougher economy, especially when buying groceries. Clipping coupons is downright trendy today - but is it really such a good habit? Sure, getting fifty cents off that package of cookies or that brand-name detergent is a discount, but you may be surprised to find that your grocery bill isn't really going down despite all your coupon clipping. The truth is that buying generic brands that are just as tasty is often cheaper; coupons can make us buy things even we didn't plan for.
Start with a grocery list for the week, and then look at your clipped coupons. If you can use one, great, but try supermarket brands too for the best bottom line.
- Shopping With Your Emotions
It was a rough week, or a good one, or you want to reward yourself for losing a few pounds, so you go shopping. You earned that new dress, that new gadget, that big pie - it was on sale, too. Letting your mood dictate your buying decisions is the quickest way to go broke.
Sober up before shopping. Do you need these items, and can you afford them? Be honest with yourself. Reward yourself by doing something that doesn't cost, like taking a nice bath, or spending time with your loved ones. (Did your emotions get the best of you? Don't miss Damage Control For A Busted Budget.)
- Not Planning Ahead
It's Tuesday, you're tired, and have no idea what you'll make for dinner. A great night for takeout, right? Using data from the BLS, it's estimated that the average family of four spends over $4,000 on eating out - a very expensive habit that will make you broke in a hurry.
When you make your grocery list, make a menu for the week at the same time, so you always have ingredients for a meal. If your week is hectic, try cooking on Sunday and freezing meals for the week. Plan for lunches the same way; not only will you save money, you'll eat healthier by avoiding fatty restaurant food. (Check out 5 Ways To Get Healthy And Save Thousands A Year for more healthy tips!)
The Bottom Line
It takes some discipline to break these bad habits. With some planning, discipline, and avoiding tempting situations, you can break these habits - and maybe even find you'll have a little extra cash at the end of the month.
For the latest financial news, check out Water Cooler Finance: The Post-Stimulus Slump.