6 Bad Financial Habits to Give Up This Month

Did you know that October is Financial Planning Month, which serves as a useful, annual checkpoint to make sure you are on track to meet your long-term financial goals.

Bad financial habits, though they seem inconsequential, create a burden on your financial health. Small changes can make a big impact on your future. Are you guilty of any of the following six habits? #FinancialPlanningMonth is a great time to take a look at where your money is going, or not going and make some changes.

BAD HABIT #1

NOT MATCHING YOUR EMPLOYERS CONTRIBUTION

This is one is easy...it's free money people! If you have a retirement account with your employer, there’s a pretty good chance your employer offers a match. What does that mean? They match what you put in, usually up to a certain percentage, in other words...free money. The catch, you don't contribute, they don't match. You're missing a huge opportunity here if you don't take advantage of this benefit.

BAD HABIT #2

NOT PLANNING YOUR MEALS AHEAD OF TIME

We're all guilty of this. You're running late for work and you don't pack your lunch or you have a thousand different places to be after work (meetings, school events, sporting events, etc...). Eating out is often the easy solution. But it can become an expensive habit. “I’ve got nothing at home” or “I don’t feel like cooking” quickly turns into a meal costing $15 to $20 or more per person. That doesn’t take long to add up or put a dent in your long-term financial planning goal. Take an hour or two over the weekend to plan your meals, make a list and hit the store!

BAD HABIT #3

NOT STICKING TO YOUR BUDGET

You’ve done the hard work of creating a written budget. You’ve listed all your expenses, recorded where every dime of your paycheck goes and set realistic goals. There’s just one problem – you’re having a hard time sticking to your plan.

You won't reach those goals if you don't put in the work. Being in control of where your money goes each month gives you a feeling of control and helps you plan for the future. No matter what your financial dream is, a budget is the first step toward getting there.

CLICK HERE TO START PLANNING YOUR FUTURE!

BAD HABIT #4

IGNORING YOUR CREDIT

At least once a year, you should review your credit report. Why? To look for evidence of identity theft and reporting errors. Imagine going to apply for a mortgage only to find that your credit score sank due to a bank reporting error. Visit Annual Credit Report to request your free report.

BAD HABIT #5

NOT HAVING AN EMERGENCY FUND

Your car breaks down, the washer goes up, you get sick and miss work, how are you going to pay for these if you're living paycheck to paycheck? A bump in the road could be catastrophic if you're not prepared. An emergency fund can help you stop adding to your debt with each bump in the road. It is easier to pay extra money on debt right away when you have a cushion for unexpected expenses.

BAD HABIT #6

NOT CREATING FINANCIAL GOALS

Setting short-term, mid-term, and long-term financial goals is an important step toward becoming financially secure. If you aren’t working toward anything specific, you’re likely to spend more than you should.

Financial advisors exist for the same reason that mechanics and doctors exist – people can’t expect to know how to do everything on their own.  For advice on these or any other bad financial habits, don’t hesitate to reach out to us for help.

ARE YOU READY TO RETIRE? WE ARE HERE TO HELP!

Preparing for the Financial Impact of Dementia

Watching someone you love lose their independence, memories and financial well-being due to dementia or Alzheimer's is devastating. It can often become very overwhelming and as a caregiver you don't always know if you're doing everything you can to protect them and yourselves. This infographic shares 10 ways you can help your loved ones financially prepare for the impact of dementia.

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Is Generation X Preparing Adequately for Retirement?

Future financial needs may be underestimated.

If you were born during 1965-80, you belong to “Generation X.” Ten or twenty years ago, you may have thought of retirement as an event in the lives of your parents or grandparents; within the next 10-15 years, you will probably be thinking about how your own retirement will unfold.1

According to the most recent annual retirement survey from the Transamerica Center for Retirement Studies, the average Gen Xer has saved only about $72,000 for retirement. Hypothetically, how much would that $72,000 grow in a tax-deferred account returning 6% over 15 years, assuming ongoing monthly contributions of $500? According to the compound interest calculator at Investor.gov, the answer is $312,208. Across 20 years, the projection is $451,627.2,3

Should any Gen Xer retire with less than $500,000? Today, people are urged to save $1 million (or more) for retirement; $1 million is being widely promoted as the new benchmark, especially for those retiring in an area with high costs of living. While a saver aged 38-53 may or may not be able to reach that goal by age 65, striving for it has definite merit.4

Many Gen Xers are staring at two retirement planning shortfalls. Our hypothetical Gen Xer directs $500 a month into a retirement account. This might be optimistic: Gen Xers contribute an average of 8% of their pay to retirement plans. For someone earning $60,000, that means just $400 a month. A typical Gen X worker would do well to either put 10% or 15% of his or her salary toward retirement savings or simply contribute the maximum to retirement accounts, if income or good fortune allows.2

How many Gen Xers have Health Savings Accounts (HSAs)? These accounts set aside a distinct pool of money for medical needs. Unlike Flexible Spending Accounts (FSAs), HSAs do not have to be drawn down each year. Assets in an HSA grow with taxes deferred, and if a distribution from the HSA is used to pay qualified health care expenses, that money comes out of the account, tax free. HSAs go hand-in-hand with high-deductible health plans (HDHPs), which have lower premiums than typical health plans. A taxpayer with a family can contribute up to $7,000 to an HSA in 2019. (The limit is $8,000 if that taxpayer will be 55 or older at any time next year.) HSA contributions also reduce taxable income.2,5

Fidelity Investments projects that the average couple will pay $280,000 in health care expenses after age 65. A particular retiree household may pay more or less, but no one can deny that the costs of health care late in life can be significant. An HSA provides a dedicated, tax-advantaged way to address those expenses early.6

Retirement is less than 25 years away for most of the members of Generation X. For some, it is less than a decade away. Is this generation prepared for the financial realities of life after work? Traditional pensions are largely gone, and Social Security could change in the decades to come. At midlife, Gen Xers must dedicate themselves to sufficiently funding their retirements and squarely facing the financial challenges ahead.

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