Habits are the results of consistent actions wrapped into the very fiber of our existence over time. Habits can make or mar people because a habit tends to make you act on ‘autopilot’ without giving much thought to your actions. Interestingly, some habits tend to have a direct effect on your financial health. Of course, you probably know that developing some habits such as saving money is good for your financial wellness. However, this article provides insight into four seemingly harmless habits that could endanger your financial health.
1. Not saving enough money
Not saving enough money is probably the deadliest habit that could hamper your ability to create wealth and ensure your financial security. If you don’t learn how to save up money, you’ll most likely be living from paycheck to paycheck. In fact, someone that saves 30% of a 4-digit income might end with a financially secured retirement than someone with a 6-digit income without savings. However, many people tend to discountenance the value of small consistent savings in helping them build a life of financial freedom. Of course, saving $500 might not look like much; yet, $500 monthly saving with an 8% annual return will net your $1,078,176 in 25 years.
You can’t start saving too early; in fact, you should start saving up money as early as possible in your career. If you haven’t been saving up money in the past, it is never too late to start saving money and you should start finding ways to prune your expenses now.
2. Being afraid to take risks
A seemingly harmless habit that could wreak havoc on your finances is being afraid of taking risks. Many people save up money, but the fear of taking risks often incapacitates them from investing the money. The fear of taking financial risks is a learned habit that you acquired because you don’t want to lose your money. However, not investing savings is a guaranteed way to lose money because inflation will erode the value of your savings.
In other instances, you might need to embrace the entrepreneurial risk to start a business or leave the security of your current job to join the next Apple or Facebook. In simpler times, you might need to take bold financial steps such as getting a loan to remodel your home before putting it up on the market.
3. Ignoring your health
Health is wealth sounds cliché; yet, the fact remains that your financial security can be seriously jeopardized if you fail to take care of your health. Many people chase wealth at the expense of their health only to spend a decent part of that wealth on drugs and surgical procedures to regain their health. Of course, you might need to be hardworking – with 80-hour work weeks and 4 hours of sleep each night; yet, you’ll need to remain healthy in order to work and grow your wealth.
You can quit risky habits such as excessive consumption of alcohol and you can also leverage free preventive-care programs guaranteed by the government to stay ahead of potential health challenges.
4. Keeping up with the Joneses
Your finances are likely to run into troubled waters down the road if you have a habit of trying to keep up with the Joneses. Keeping up with the Joneses is an unhealthy financial habit that forces people to live beyond their means in order to put up an appearance of being rich or being financially buoyant. Ordinarily, spending more money than you earn is a recipe for financial disaster because it could get you into a vicious circle of racking up debts on things that have little or no value beyond the initial high that comes after the purchase.
To prevent yourself from falling into the trap of keeping up with the Joneses, you might need to draft up a budget for how you spend money. More importantly, you’ll need master your emotions so that you do not discard the budget every time you see a new shiny toy in the market.