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4 Good Financial Habits That Can Go Too Far

woman looking at her credit cardYour financial habits are hands down, the key to improve your financial situation. It does not matter how much income you earn. If you implement the wrong habits because of incorrect financial concepts, then you have no chance of getting out of a bad economic situation.

Some people have grappled with the idea of what habits should and should not be implemented in their personal financial condition. There are so many misconceptions out there that it can be quite confusing to know which should be followed or not.

Take for instance our belief that credit card debt is caused by irresponsible spending. While it is true that your spending can lead you to unmanageable credit card balances, that is not the whole reason why you have credit card debt. According to a study done by Demos.org, there are other factors affecting your credit card spending. Things like your education, insurance coverage and children are part of the reasons why you are currently suffering from credit card debt. You have to understand these things before you can truly and completely be free of your compulsion to spend using your cards.

Just like this misconception, there are also a lot of things that you should know about financial habits. It is not a simple good and bad habit. You have to go deeper than that concept to truly understand what is right and wrong for you. Sure it is easy to say that you should practice only good financial behavior. But you have to know that there are certain habits that although they have good motives, can turn out of be really bad for you.

4 good habits that can ruin your finances

In truth, anything in extreme is never good for you. It is true what they say – too much of a good thing can also be bad for you. That being said, let us discuss 4 financial habits that will not do you good if exaggerated.

Saving too much for the future.

A lot of people might disagree here. In fact, financial experts love to preach this: we need to always think ahead into the future because we owe it to ourselves to have a good retirement. They say that we need to pay ourselves first – meaning we have to make sure that our retired future self will be well provided for. There is some justification to this but remember that you should also let yourself enjoy the present. We need to save but not to the expense of our present life being too miserable. What need do you have for millions of dollars in your retirement if you will only spend it on expensive medical treatments because you exhausted your body trying to earn money to save? Saving can save your life but you need to set a limit. Plan what you need to save up for and cut your present self some slack once in a while.

Cutting back on your unnecessary expenses.

This is another of the financial habits that can really tear consumers apart. Some people believe that cutting back on that latte is imperative if you have a lot of debt to pay for. There are also people who will tell you not to treat yourself to a spa or a massage because that money could go to your savings. If you think about it, these make a lot of sense but here’s what you should consider. Some unnecessary expenses are needed for you to be motivated enough to pursue your financial goals. People may think that the morning latte is a waste of money but if it gets you going in the morning, then indulge yourself. If that is important to you, then buy that unnecessary item. Just make sure that when you do so, it will not make your expenses bigger than your income or it will not put you in debt. But if you have the extra cash to spare without making your savings contributions for the month zero – then give yourself the needed pampering. You do not have to completely let go of these things to find financial happiness. In fact, it might be just what you need to be motivated.

Comparing prices.

We all want to get the best value for our money. However, you do not want to spend forever trying to figure out and compute what product to use. While we do not want to waste our money, you do not want to waste your time either. Take for instance couponing. It is true that this can help you lower your expenses but it is just too tedious and time consuming to do. If you have the option to work longer hours to earn more, wouldn’t you want to spend it earning instead of clipping coupons? Are you really saving if you are too obsessed with saving pennies on each purchase you make?

Forgoing professional services.

DIY – this is another of the financial habits that we are being encouraged to pursue. There are things like debt relief or financial planning that we can do on our own but this is not always applicable for everyone. Again, time is a factor here. But even if you have the time to work on something on your own, make sure that you can do it properly. There are certain tasks that are best left in the hands of  professional because the cost of making a mistake will end up making you spend more that you should. While it is a great idea to do it yourself, make sure that you really have the capabilities to do it correctly.

Learning to balance your present needs with your future goals

We are not saying that these financial habits are bad. We are just saying that they should be done in moderation and with a deep regard for present circumstances. Being wise with your spending and saving more money are great habits to have. However, you have to learn how to balance your present needs with that of your future goals.

There is this article on Forbes.com that discussed how even spending on experiences instead of material things may not make you happy. The article mentioned that if you focus on life experiences, it does not necessarily mean you will be happy with your spending. You have to take into consideration what is valuable to you as a person.

For some people concentrating on buying for the sake of experience could work but for others, it may not. For instance, buying clothes is more of materialism than experientialism. However, if you are in an industry wherein you need to portray your professionalism through your outward appearance then buying clothes is something that you know you have to do.

What we are trying to point out is this. The financial habits that you should pursue may or may not be according to what the majority is doing. Sure saving for retirement is a good idea but if it is keeping you from enjoying your life today, then you need to rethink how you can save for retirement without depriving the present.

All it really takes is to know what is in moderation. Even the good financial habits, when done in extreme can do you more harm than good. Do not be too blinded by your need to succeed financially. First and foremost, understand yourself and your financial personality. Once you have that knowledge firmly in place, you will know what you truly deserve out of your money. After all, it is just a tool to help you thrive in this life. Everything else, the rules, the control, the plan and the implementations are all up to you.

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