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Many people have bad financial habits that are costing them a large amount of money over the course of a year.  Many of these habits are unconscious, everyday routines that people have learned by observing others that display these damaging behaviors.  Bad financial habits have the ability to destroy your credit score, cost thousands of dollars in late fees and penalty payments, and cut you off from economic activities that could improve your financial standing.  If you are able to change these bad financial habits, you will find your financial situation much more stable and your ability to handle financial emergencies assured.

Spending Freely

One of the worst financial habits to cultivate is being a free spender.  Spending without planning or considering the consequences of your spending can lead to a lot of wasted money on things that are desired, but not necessarily needed.  Many of us have seen the “hoarders” reality shows on television where desperate homeowners are drowning in piles of stuff that they bought that they didn’t need.  By planning your purchasing ahead of time and limiting impulse purchases, you can reduce the amount of money spent on unnecessary purchases and use that money for more useful activities.

Opening Many Credit Card Accounts

A number of retailers have taking to stalking their customers in the store and online to encourage them to sign up for the retailer’s “exclusive” credit accounts for their stores.  The reason why you are asked when you enter the store, as you shop, and as you attempt to check out is that these credit accounts can be very lucrative for the retailer, but not so good for you.  Retailer credit card accounts often have higher interest rates, higher fees, and lower credit limits than credit cards issued by the major credit card companies that can be used anywhere.  Add to this the hassle of keeping track of multiple payment dates, minimum payment amounts, and credit card terms, and the chances of accidentally missing a payment and incurring hefty charges increases dramatically.

Using Credit As An Emergency Fund

The recent boom in the credit markets steered many people away from saving cash to use for emergencies to depending on their credit cards to handle any financial issues that arose.  As a result, many people found themselves with high levels of credit card debt at high interest rates that they have great difficulty repaying within a reasonable period.  Placing the cost of a financial emergency on a credit card increases the cost of that emergency dramatically as interest charges and financing fees are added to the original cost on a monthly basis.  Saving money in an emergency fund to handle unexpected financial issues is the best way to solve the problem without creating more issues for the future.