(636) 898-0888 Toll Free: (877) 456-2900
Developing good financial habits is not necessarily something that’s ingrained in us. Many people fall into the old adage of “the more you make, the more you spend.” This can lead to habits that might eventually cause you some financial distress. It can take years of experience to develop good financial habits, but the benefits of being responsible with your spending are well worth any effort it takes to develop these good practices. Below are some of the top money mistakes all Chicagoans should avoid:
Relying on and overspending with credit
Credit cards can be beneficial to establish your credit rating and as a contingency for unexpected needs. However, it’s quite dangerous to think of them as money always available to spend. Most credit cards have a high interest rate as well as additional fees associated with them. A good rule of thumb is to only purchase items with your credit card that you can reasonably pay off within two months. Oftentimes, making multiple purchases on your credit card and only paying the minimum balance each month leads to even more debt.
Missing monthly credit card payments or paying late
Skipping a credit card payment or paying it past the due date is a dangerously bad habit. Credit card companies are not only charging interest, but they also have astronomical late fees anywhere from $30 to $50 per month. The interest rate you’re also paying is now being applied to that late fee as well, which can add up quickly and make it nearly impossible to pay off those credit cards.
Spending out of convenience
Woke up late and figured you would just pick up a coffee and a muffin from Starbucks? Didn’t feel like packing your lunch or making your dinner and thought it would be easier to just go out? Everyone does it. Spending out of convenience or laziness adds up and it adds up quickly. If you think about it, buying a macchiato and a croissant every day from Starbucks, on average, costs about $7 per day, which is $35 a week if you only do it during the workweek. That’s $140 a month, and that’s just breakfast. We tend not to notice our convenience spending as we do it, since it’s generally in such small amounts on a day-to-day basis. We do, however, notice when the bank account is getting low after a while. Make your coffee and lunch at home and go out for a special occasion or for a gathering with friends. Your body will be healthier and so will your wallet.
Buying things you want as opposed to things you need
Have you ever moved from one home to another and thought to yourself, “how did we get all of this stuff?” We are a culture of want, not necessity. It can be something small or something much larger, like a car. You have a reliable car that’s paid off, but you trade it in for a more expensive model with a $500 a month car loan. This may seem like a necessity in the moment, but think to yourself: do I need this, or do I want it? Buying something shiny and new is not always a wise choice. Focus on your long term needs as opposed to short term wants.
If you’d like to talk more about any of these ideas, or if there’s something else we can be of assistance with, please reach out to us. We’re always happy to help.