This is a guest post from Pauline of InvestmentZen.com
For as much you may think in the grand scheme of things, your little daily habits won’t make or break your retirement and savings plan, they might. Let’s have a look at how much bad habits can cost you over the long term.
You smoke (drink, eat too much junk food,…)
We all have a soft spot for something we like to indulge in once in a while. But if the habit is too frequent, it can cost a lost of money.
- At $6 a pack, smoking 10 cigarettes a day will cost you $1,095 a year.
- A $8 burger meal every week day instead of brown bagging leftovers costs $1,920 a year.
- $20 worth of drinks every Friday and Saturday cost $2,080 per year.
If you quit smoking, bring lunch to work and have one $5 drink on Friday and Saturday, you can save $4,575 per year!
You carry a balance on your credit card
Paying 18% interest on a $1,000 balance is costing you $180 per year. Oh, that’s “only” $15 per month? Yes, that is one meal you don’t get to share with your friends, or two months of Netflix, just because you are paying in arrears for stuff you have long used or eaten.
If you carry a balance, get a 0% balance transfer card, and what you used to pay in interest can be used to crush your balance instead.
You are lazy
Laziness can cost you a lot of money, because you overpay for convenience. Instead of staying on top of your bills, you forget to cancel that gym membership month after month. And the storage unit is full of things you will never use, but you keep paying for it. You rarely watch TV yet you have a $39.99 cable subscription.
You never challenge your utility bills once the new customer incentive is over. You may be paying hundreds of dollars more every year for the same service, because you didn’t call your provider to ask for a discount.
You get take out every night because you don’t want to cook at home. These habits are easier than you think to get rid of. Start by one little thing. Call the bank to stop the gym payments. Empty the storage unit. Tackling one thing at a time will help you gain momentum and save you a lot of money.
You don’t have a retirement account
Investing for your retirement is something you should start as soon as you enter the workforce. Yes, that sounds crazy, but it is much easier to plan for retirement over 40 years than over 15. Not having a retirement account means your cash is probably earning you nothing on a 1% savings account, instead of being invested in the markets. Opening a brokerage account is much easier than you think, and if you have a company match on your contributions, you should get started right now and stop passing out on the free money!!
Start by funding your 401k and Roth IRA, then if you have any more money, you can invest through a regular account.
You don’t plan ahead
YOLO and being in the moment is a ton of fun, but it makes me want to bang my head against the wall when I see my friends going on the same holiday I am, but it cost them twice as much. Why? They failed to plan ahead. I book my flights and accommodation months in advance to get the best deals when I go somewhere. If I go hiking, I carry snacks and water so I don’t have to pay extra for the convenience of a vending machine. When I pass by a cheap gas station, I fill my tank, so I don’t have to drive 10 miles when the empty tank warning lights up. I buy discounted winter clothes in the spring for the following winter.
Planning properly includes saving for big expenses (Christmas, car repairs,…) in advance so you don’t have to charge your card. Doing regular maintenance on your water heater, AC units, car and other appliances so they don’t break down. It includes having proper insurance so a health emergency doesn’t bankrupt your family.
Not planning means you’ll have to pay a lot more for the same products and services. All that money spent for nothing is money you don’t get to save for the future, and money you need to earn by sitting longer at your desk. How about forming better habits instead?