10 Times When Smart Personal Finance Habits Become Dumb Ones


Most of us need a little assistance in the personal finance department. It’s just the truth of the matter. Even those of us who think we’re doing all right in the personal finance area of our lives are always learning more, and we are always in need of a little financial education. There is always something to learn, you know. My grandmother, who you should know is the coolest woman in the entire world. She’s just shy of 100, and she’s running circles around me and everyone I know. She’s a wise woman with a lot to teach, and when she told me that if you’re not learning something new every single day, you’re not doing life right, I realized something; no one ever knows it all. That means there is always something to learn, and how to be more financially savvy is one of those things. Of course, many of us become so focused on our financial standing that we sometimes turn our good financial habits into stupid ones. Here are 10 instances in which your typically smart financial habits become stupid.

When you save but don’t value interest

People are more into saving than interest when rates are low, and that’s all right in theory. However, if you are not focusing on how much interest you could potentially earn when you do things that are financially smart, you are not doing yourself any favors. For example, you could pay your insurance in advance this year and not having to worry about the monthly payment. But if you paid monthly throughout the year and let the rest of the money sit in a savings account, you’d actually earn money. There you go.

When you overpay taxes in an effort not to owe

No one likes to write a check – big or small – to the IRS during tax time. No one. But it’s better than getting one back. That money you overpaid the government would have been far better in your pocket, because it could have been earning interest in a savings account. You just paid it to savings free of charge. It’s a waste of money.

When you save too much

There is such thing as saving too much, you know. It’s not a bad thing to save, but it is a bad thing to save when you don’t do anything else with your money. When you don’t invest, when you save too much that you forget to put your money in places that it will make you money, it becomes a problem.

When we confuse frugal with cheap

There is, you know, a huge difference. Being frugal means you look for resourceful ways to make money. Being cheap means you spend no money. But that is not always a good decision to make. Be frugal; not cheap.

When we forget to have fun

Life requires some fun from time to time. It does require some splurging. It does require that you sometimes take a vacation or buy something you really want. It’s not about deprivation. No amount of money in the savings account is worth it if you are not having some fun from time to time, you know.

When we don’t invest in the right places

You have to invest in the right places. You have to invest where you will make money. You can’t just use a savings account and forget to invest your funds elsewhere. You have to make good financial and investment decisions, and that will make a huge difference in your financial future.

When we overthink financial decisions

Some financial decisions are worth thinking about for a little bit longer than others, but not all of them are worth agonizing over for a long period of time. When my husband and I made the decision to buy a boat, we picked a budget and we thought long and hard about spending that much cash on a boat. Did we really want to? Did we think it was a good idea? Could we have used that money elsewhere? We were in the position to spend the money, we went out with our kids on friends’ and family’s boats every weekend and we do live less than 5 miles from the Gulf of Mexico. So yes, a boat was a good idea for us.

When we spend to earn, the wrong way

It is true that you do have to invest in your business if you want to make money, but not all of that is correct. For example, you should never put out a ton of money on a get-rich-quick scheme. You should never put out a ton of money upfront with the promise that you will make a ton of money in the long run. Use your logic and your considerable intelligence and spend money to make money only when you do it the right way.

When we use only cash

Using only cash is not always a good idea. It might make you feel as if you are doing something correct to prevent debt, but it can also harm you. For example, many credit card companies offer amazing travel rewards and even cash back rewards. You’d be better off using those to buy your everyday purchases and to pay your bills, and then using that cash you typically use for those things to pay that card off at the end of the money so that you can reap the rewards without accruing any debt in the process.

When we take other’s advice

It’s not a bad idea to take advice from others as it pertains to our financial situations. But it doesn’t warrant only taking the advice of others. Sometimes you have to forgo what feels like good advice because it is not good advice for you. Sometimes what works for others does not work for you and your particular financial situation, and you have to be very aware of instances such as this so that you make informed decisions that benefit your financial future.

Photo by Getty Images


Leave a Reply