Let’s get real; we all sometimes spend money unnecessarily. However, in certain cases, we overlook spending habits that may do more harm than good. Here are 6 common habits you may have gotten into and how to break them:
1. You Follow “Emotional Spending.”
Have you succumbed to “emotional spending”? According to clinical psychologist Sheila Forman, many Americans spend money as a coping mechanism. If you find yourself scrolling through websites, looking for something to buy when you feel down, turn to other methods like journaling, meditating, or reaching out to a trained therapist.
Of course, if you have money in your budget to do some “emotional spending,” it can sometimes help lift your mood, but it’s best not to give into this temptation very often, as it can lead you to tumble down a slippery slope. To keep yourself in check, don’t spend money you don’t have in your “entertainment” budget.
2. You Don’t Know What to Do With Your Money
Once your expenses are paid, do you feel you need to spend what’s left because you don’t know what else to do with it? Instead of just spending because you have the money, give every dollar a job. Make separate categories for entertainment, savings, investments, and bills. You’ll refrain from overspending once you know where your money will go each month.
If you have extra cash and don’t need or want to spend it on anything in particular, resist the temptation to spend and save it instead. If you put that money in a savings account, you could watch it grow and may enjoy the challenge of trying to continuously add some extra money to your savings.
3. Paying Unnecessary Banking Fees
Did you withdraw money from a certificate before the term length was up or go negative in your checking account an wind up with overdraft fees? These actions can all incur additional charges that you can avoid. Don’t open an account at a financial institution without knowing all the fees that are associated with that account; both when you open it, while you have the account, and if you close it prematurely. And make sure you can stick to the parameters of the account to avoid those fees. Ask to see a schedule of fees from the financial institution so you know what you are signing up for!
4. You’re Too Loyal to a Brand
Would you rather have an iPhone even if it costs twice as much as a competitor because you want everything from the Apple brand? Or, perhaps you only buy athletic apparel from Nike, no matter the cost. If this description fits, you may be TOO loyal to a chosen brand! Sometimes, you may skip over better offers because you like a sporting brand the best, don’t trust the store brand, or are convinced your chosen brand is the best because of strategic marketing.
However, this habit could cost you by not considering alternative products which may be cheaper or even higher quality! Take stock of your biases and see if you’re consistently buying the same brand without having a good reason.
5. Spending for the Future
Have you always dreamt of learning to play guitar and impulsively bought an expensive model because you figured you would use it eventually? This is sometimes referred to as “spending for the future.” When you “future spend,” you purchase for a future event that likely will never happen.
When this occurs, you waste money and time by researching and buying things that will never go into use. Instead of “spending for the future,” spend on stuff you need and will use now.
6. Not Evaluating your Finances Regularly
If you have a car loan, mortgage, or have been depositing all your money into a single savings account for longer than you can remember, it is time to reassess your finances and see if there are better ways to manage your money.
With FFCCU’s Dare2Compare account review, we may be able to save you some extra cash by reviewing your finances together and suggesting ways you can more effectively allocate your money. This may mean refinancing high-interest loans, budgeting differently, or opening a deposit account with a higher annual percentage yield, (APY).
All you need to do is schedule an account review today here or call/text at 216.621.4644. If you want to learn more about an account review, check out some Dare2Compare success stories to see how FFCCU has helped people like you save money.
Make Sure to Monitor Your Spending This Month!
It sometimes takes time to halt lousy money-spending habits, but with diligence, you’ll soon be on your way to spending smarter. And, if you need help setting up your financial goals in the new year, reach out to us at FFCCU and schedule a Dare2Compare to see if we can find new ways to keep money in your pocket.