Monday, July 25, 2011

10 Habits That Are Killing Your Budget

We've all seen the usual budget advice - cut out that late, eat more at home - but these little nuggets of wisdom often focus on small things that many of us stopped doing long ago or have learned to enjoy in moderation as befits our budgets. This post talks about some oft overlooked, but crucial habits that can be killing your budget without your even noticing. Looking at the mindset that leads up to these budget boo-boos can help you develop defenses against them.

1) Impulse "Sale" Purchases - The people set up stores are no fools. They put the childrens clothes right next to the maternity and the sale items at the ned of every grocery aisle for a reason. They are hoping to lure you into an impulse purchase. Frugral readers can usually avoid the temptation but succumb when a giant "Everyday low price" or "Sale" sign is tacked on. Think to yourself 'can I remove one item from my cart or my list because I am getting this item?' if the answer is no you likely don't need it. Look at the price critically. SOmetimes these signs do not indicate any actual price drop. What price do you usually pay for this item? Even more crucial - how much of that tiem do you really need? Buy one get the next at a discount sales or sales that require you to buy multiple packages may let you pay less per item but you end up buying more items thn ou can possibly use and thus costing you more in the longrun. Some sales are great, as are some stock ups, but not all arecreated equaly.

2) Not Having a List - Strolling hte aisles hoping to be "inspired" for this weeks dinner menu leads to overpurchasing and waste. BY planning ahead you can group meals with similar igredients together helping to avoid waste. ou can also plan for menus that use leftovers from other nights. lists also force you to stay on track and avoid the perils of impulse purchasing. It certainly takes some time to plan out a list - especially if you, like me, like t plan meals arond the stores sale/discount/loss leader items but the are well worth the efort. They also streamline the cooking process later in the week. Do yourself a favor and make a lit. Then keep it (perhaps electronically) so that you can reuse some menus later down the rad cutting out excess list making time.

3) Refusing to buy generic - There are only a few items where a suitable generic cannot be found and one must buy the real deal. Heinz ketchup comes to mind. Other than that, you should at the very least try the generic once before branding it inferior. You may jjut be surprisd. Generic does not mean lower quality. Often th ingredients re exactlyt he same in hte name brand and the generic. It just means it was manufactured by a diffferent company. Kirkland, Costco's generic label is known for high quality. This is especially insidious int he case of medication. You feel justified in paying more for your families health. however the drug industry i highly reulated and if a generic put anything but the proper, pure medication intot hat bottle it would not be allowed to reach shleves. Tylenol, acetaminophin, has been around forever and there is no secret formula. The generic works jsut as well as the brand name nd is just as safe.

4) Giving in at the last minute - After  shopping trip well done, you feel like you deserve a reward so you grab one of those candy bars sitting at the register. Or your child is using hte checkout line wait as an audience for his screamin fit about that silly putty he really wants. What's a girl to do? Put it back. It may seem like such a small thing but those $2.00 candy bars once a week can add up to hundreds of dollars. It is important to treat yourself nd keep yourself feelin good, but this should be done in a rational thought out manner. Would you rather have those overpriced candy bars or those new shoes that moved to the clearance rack and became affordable at the end of the month? As for your child, practice saying "no, sorry not today" adn as they age start giving them an allowance and letting them spend it themselves. You'd be surprised how many "I NEED it" screamin fits disappear when you tell a child to spend their own money on it. As they learn how to prioritize wants because their funds are limited you will be teaching them to maintain a budget as well.

5) Thinking your too yong t save for retirement - When you are young is the exact right time to save for retirement. It gives your money the optimum chance to grow and accumulate. This is espcially true for those with a Roth RIA that lets you pay taxes now to avoid paying them when you withdraw money. A 25 year old who starts to save has to put in half or less of what a 35 year old would have to put in to reach the same amount when they hit 65. If you don't yet have a retirement acount, make one. And if you company has a matching money policy, please contribute as much as you can or to the max that this policy will allow. This is free money that you are getting as the company has promised to kick in just as much as you do.

6) Overspending to get Rewards - I regulary feature mileage deals and explain how credit cards can be used to up your redit score and get you bargains. However I always accompany these posts with a very important disclaimer.

7) Not Reading Your Bills - I know it feels great having the money to pay those bills, but don't just blindly write a check. Look at what you are paying. Has thre been a big change? Is there something you did not buy listed on there? These are issues that need to be adressed! On the average medical bill I usually find 40-100$ that magically disappear when I call their receptionist and ask what is going on. Plus reading your bills can alert you to changes in your money spending habits, areas that are hemorrhaging money and how to nip rising bills in the bud.

8) Buying Before Checking for a better price - We all want to get chores done quickly. However sometimes a simple search can turn a good deal into a great one. Simply typing "insert name of store here coupon" into a search engine can find you free shipping or coupons. Sites like 'retail me not' jumpstart the process. Sites like eBates may even give you cash back on your purchase.

9) Waiting for your partner or friends to bail you out - Your spouse is not an ATM, neither are your friends or your parents. Do not avoid forming a financial plan because you think your nearest and dearest will always bail you out. This is not fair to you or them.

10) Giving up the minute you break one of these rules - This is pretty self explanatory. We all fall off the wagon sometimes. That doesn't mean you shouldn't get back on.


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