It’s a new year, and that means it’s the perfect time to make some changes in your financial habits to keep more of your hard-earned money for yourself. If your resolutions are about building your savings or paying down your debt, you’ll need to find some extra money to make that happen.
Check out these expensive habits that keep most Americans from reaching financial independence. Even if you change just one or two of them, you’ll be well on your way to a more prosperous new year.
The Coffee Shop Habit
By now you’ve heard of the Latte Factor, right? Money that you fritter away on little luxuries without thinking can really add up over time. The phenomenon is named after a coffee shop specialty for a reason: If your daily cup of java costs three dollars at Starbucks, you’ll shell out over $1,000 each year for that mocha cappuccino. Vow to make your own cup of Joe and watch your savings grow this year.
The Vice Squad
spend about five dollars per day on cancer sticks, which comes out to $1,825 per year. Quitting helps your health and your bottom line.
Alcohol isn’t cheap, either — especially if you buy it in a bar or restaurant, where you’re paying a lot more for the ambiance and service than you are for the actual pint of beer. Even if you’re not ready to give up that red wine for good, try hosting house parties instead: Mixing your own drinks is fun, and you’ll spend a lot less doing it yourself.
The Automatic Charges
Have you ever signed up for the “convenience” of having a service automatically deducted from you checking account or charged to your credit card? This could be anything from delivery of home heating oil to any of those free trial memberships you forgot to cancel that are jacking up your bills each month — without you even noticing! The biggest culprit here just may be that gym membership, so unless you’re actually working out (or enjoying all the shows on Amazon Prime), it’s time to comb through your credit card statement and start cancelling things.
The Cheap Fix
From fast fashion to cut-rate appliances, Americans tend to feel more prosperous when they’re able to buy lots of stuff. To make this possible, you’re probably buying really cheap stuff to save money. While this may seem like a great idea at the time, low-quality goods don’t last very long, and you’ll end up spending more in the long run to replace broken appliances or clothing that falls apart after the second time you wear it. When you buy something that’s well made, you won’t have to replace it so quickly, and that means you’ll ultimately spend less.
Take the time to check product reviews and try an item out before purchasing — quality and price may or may not be related.
The Credit Card Balance
Even if you’re not up to your eyeballs in student loans and other consumer debt, many Americans carry a balance on their credit cards. You don’t have to max out your credit cards to have those interest charges eat away at you: One late payment comes with a hefty late fee plus the interest charges on your balance. When your credit card interest rate is somewhere between 12 and 20 percent, that can really add up.
Make your payments early to avoid any possibility of late fees, and pay it in full each month if you can. There’s simply no need to carry a balance unless you’re faced with an emergency — your account stays open even when you pay off the balance each month.
No matter what you own personal worst habits are, January is the perfect time to change them for the better. Even if you tackle just one of these expensive money habits each month, you’ll be able to make positive changes this year that will put you on track for giving your savings a big boost in 2016.