In theory and deep inside of our hearts, we all have good intentions to save, pay off student loans, and work toward financial independence. Most people do not knowingly sabotage themselves when it comes to their financial security. Yet the average credit card debt is at $16,748 per household. And consumer debt is at about $7,800 per person. So somewhere there is a disconnect between what we know to be good actions versus impulsive behaviors that lead to a leaky wallet. Read on for a few ways you could be sabotaging your future financial freedom.
1. Spending future money.
You know a paycheck is coming in, so you begin to spend it before it is in hand. It starts off with small, justifiable purchases. For example, you need to fill up on gas, or a utility bill is due and you have no extra cash on hand. So you charge it to your credit card. But using a credit card to take care of poor foresight and budgeting can lead to a reliance on it that further leads to a bad spending habit. Spending future money that is not yet in your bank or physically in your hands is one of the surest pathways to debt.
2. Drinking too much.
You may not think your drinking is out of control, but your weekly or monthly alcohol totals may tell a different tale. Aside from the bite it takes out of your wallet, it has an effect on your health that could come back to haunt you in the form of huge medical bills. Not only that, but according to Bartislaw.com, a DUI attorney, “When you drink and drive, you risk losing your license, freedom, finances and your future. … It is possible to be arrested for a DUI without reaching the .08 limit.” This could happen if the law enforcement officer believes that you are too intoxicated to operate a motor vehicle.
3. Emotional spending.
Do you understand your emotional triggers? And how they can lead to a shopping spree or buying a pricey item way out of your budget? It could be you worked extra hard a certain week and as a treat for yourself, you book a full-day spa treatment. Or you see a limited-edition watch for sale and you don't know when another chance like this will come around. Most of us are emotional shoppers. We buy based on emotional reasons versus practical necessity. Not being aware of how your emotions could be causing you to spend more than you have could put you into a deep hole that is hard to climb out of.
4. Not creating an emergency fund.
An emergency fund can be a lifesaver. But when you're in debt, or you have monthly bills all screaming for attention, it can be hard to work toward building an emergency fund. Many financial advisers state you should have enough in your emergency fund to cover 3 to 6 months of living expenses. To find this number, calculate your monthly expenses, including rent, food, utilities, health bills, etc. Times that by 3 or 6. Failing to plan for emergencies can lead to credit card debt and can turn a difficult situation into a financially devastating one.
5. Putting too much stock on appearances.
Keeping up with the Jonses is a financial trap that can put your financial security at risk. Living within your means can be hard to do when you see others with a lavish lifestyle that you may desire but can't reasonably afford. You may need to make some hard decisions about what is more important to you, being debt free, or looking good. One thought that should help you through this potential sabotage is that real lasting happiness is not linked to things.
If any of these rings true, then you now know the areas that need work. Target these mindsets to get rid of thought patterns that could be hindering your financial freedom.
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