10 ‘Normal’ Money Habits That Are Actually Harmful

Andrew Lisa   Mon, April 10, 2023

Just because you get into the habit of doing something doesn't mean it's good for you -- and gnawed-on fingernails and cracked knuckles aren't the only proof. Some of the worst habits that tend to die the hardest show up not only on people's bodies but in their financial lives as well.

From the way people budget to the way they spend, save and invest, minor sins are easy to come by. Like so many bad habits, some people don't even realize they're making money-related mistakes at the time. Or they realize it but find it hard to change.

The following money habits have been normalized over the years but are still just as harmful as ever.

Not Following a Basic Budget

Many people have no idea how much money they spend each month. Perhaps unsurprisingly, younger adults are the least likely to keep track of their spending. No matter your age, your financial goals both big and small will die on the vine if you don't know how much money you're bringing in, how much you're spending, where you're overspending and the percentage of income that you're saving -- if you're saving at all.

Ignoring Your Credit Until It Matters

Despite the widespread availability of free apps such as Credit Karma and free credit trackers that come with most bank accounts and credit cards, plenty of people still ignore their credit for most of the year. They check in only when they're up for big purchases or loans, often finding that their scores are a whole lot lower than they had imagined or that there are mistakes on their reports that they could have corrected before the damage was done.

The truth is your credit is important 365 days a year. It affects the rates you'll pay, not only for mortgages and auto loans, but for things like insurance and utilities. It also impacts whether employers see you as hireable or whether landlords will take you on as a renter.

Knowing what's in your credit report is the first step to managing your credit. By tuning out, you're accepting a more expensive life.

Carrying a Balance on Your Credit Card

Many of America's credit card users carry a balance on their accounts -- which is exactly what banks want them to do. When you pay your statement balance in full every month, you pay only as much as is needed to cover your purchases.

If you don't pay your entire statement and carry a balance, on the other hand, the bank will hit you with finance charges. With the average credit card interest rate now hovering around 20%, that balance will find a way to grow even as you try to pay it down, leading to an endless snowball effect of new interest compounding on last month's interest.

If you pay your balance in full just two months in a row, however, finance charges -- and that toxic cycle of debt -- come to an end.

Automating Your Bills to a Fault

To continue reading, please go to the original article here:

https://news.yahoo.com/finance/news/10-normal-money-habits-actually-200013138.html