by Dana George | Updated July 17, 2021 - First published on March 20, 2020
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Our behaviors impact our economic futures. Here are five traits to avoid if you want your financial future to be bright.
As humans, we have an odd way of cutting ourselves off at the knees. We set a goal and then go out of our way to undermine that goal. We vow to lose weight, only to eat half a birthday cake in one sitting. We tell ourselves that we're committed to reading the classics, only to stop halfway through Anna Karenina. We decide that this is the year we will take control of our finances, only to fall back on old bad habits that frustrate our efforts.
Again, we're human, and we're going to make mistakes. The trick is to figure out which behaviors undermine our financial goals and discover healthy ways to deal with them.
Here are five common ways our behavioral traits sabotage our finances:
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It's easy to justify an unnecessary purchase by telling yourself that you'll pay it off at the end of the month. It's easy to say "yes" to buying a new car because you believe you can make the monthly payment -- even if your old car still has life in it. You lie to yourself about the impact of debt by ignoring the high cost of compound interest, and ignore the fact that investing the money instead would mean compound interest working for you. For example, putting that money into a certificate of deposit (CD) instead of spending it on something you can live without will add to your own wealth rather than a creditor's.
Either you don't believe a few late payments will impact your credit score or you think your credit is so far gone that it no longer matters if you pay bills on time. Neither is true. You will never know financial freedom until you pay your bills on time and raise your credit score.
Because humans love to be loved and long to be accepted, you give everything you have to your partner and/or children -- even if it means going without yourself. Some of the downsides of giving until it hurts include:
The world seems to be divided into two camps: Those who are convinced that something bad is around every corner and those who refuse to believe anything bad will ever befall them. If you're someone who doesn't spring for life insurance because you don't want to think about dying, or someone who under-insures your auto or home because spending money on insurance feels foolish, you are making one of the biggest financial mistakes of your life. All it takes is one accident to wipe out everything you have worked for.
No matter how many hours you work each day, how many hours of sleep you skip, more will be asked of you. People will want you to join clubs and committees, accompany friends on excursions, attend family events, and otherwise fill the hours of your days with activity.
You may be tempted to believe you can do it all. In fact, you may want to do it all. If one of your behavioral traits is to spread yourself thin in hopes of pleasing other people, it is likely to impact your finances. That's because multiple responsibilities lead to a lack of focus, and less sleep leads to lower productivity. Lack of focus and lower productivity is the perfect recipe for falling behind in your career, ultimately impacting raises and promotions.
Recognizing the role behavioral traits play in financial success gives you the ability to make changes where needed and make the most of your economic future.
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