We all have them: our own personal finance vices, our bad money habits. No one can be perfect all the time, and we’re all subject to giving in and spending a little more when we know we shouldn’t, or getting a little lax with tracking our spending and budgeting down to the last cent.
Some of the excuses we use to defend our bad money habits are just lame. Yet we’d rather make these excuses rather than face reality and make a plan to change our behavior. It’s these excuses that we need to bust today, because these are the ones that are holding us back financially.
Here are some of the most common excuses I hear people give for their bad money habits – and why we need to stop making them.
I Don’t Know Anything about Money
Never a better time than now to learn, then! Don’t let a lack of knowledge hold you back financially. Use your favorite personal finance blogs as your own personal money Google: go to a blog you enjoy and type your question into the blog’s search box. See what kinds of posts pop up.
Bloggers are just one place to start (and I say we’re a good resource because that’s what we’re here for — to share our knowledge and what we’ve learned with others). If you need big-time help, don’t hesitate to ask a professional. Ask a financial planner who is willing to be your fiduciary your most pressing questions.
Don’t forget to do your own research, too. It’s up to you to make sure your money is used in the best way possible.
I’m Too Young to Worry about Retirement
Wrong. Time is the most powerful factor in determining a high-value nest egg down the road. Starting now is going to make things WAY easier on you than waiting until you’ve decided you’re “old enough” to be concerned about your financial future.
I Don’t Have Enough Money to Save
To be fair, for some this may be reality rather than just an excuse. But for the majority of us who are lucky enough to live in a country of abundance like the USA or Canada, it’s likely just something we say in an effort to avoid the real problem here: you don’t have enough money to buy all the stuff you want and save some too.
Do you really need all that stuff? Do you really use all the services you pay for each and every month? Cut the extra and learn to prioritize your spending. Your money is valuable stuff because it can be used to make more money when you invest it and allow compound interest to do its thing. Make sure anything that goes out for a purchase is bringing home something you value just as much if not more than the ability to increase your wealth.
I Can’t Make More Money
Not true! Don’t discount yourself like that. You’re a smart, talented, and capable individual who does have the power to increase earnings and income.
Negotiate a raise at your job. Consider (if you truly need to make a change) searching for a new, better, and higher-paying position elsewhere. Start up a side hustle. Start your own business.
I Can’t Invest Now — All the People on the News Have Been Freaking Out about the Market!
If this is happening, then it is the perfect time to invest. Remember the wise words of Mr. Buffett: be fearful when others are greedy and greedy when others are fearful.
But ultimately, a better piece of advice might be don’t try to time the market. Making steady, consistent contributions to your retirement account over time will earn you the greatest amount of wealth when you need it most. Besides, when the markets do go down there are now a number of easy to use online trading platforms (such as this one) that beginner retail traders can use.
I Have Enough Time to Make Up My Loss – Might as Well Borrow from My 401(k)
Again, it’s all about compounding interest! Your 401(k) is not fun money. It’s for your future and you should never think of it as a great source of cash when you need it fast. Unless your arm fell off and you need to pay for a new one, there’s really no situation where you need to borrow — or worse, empty — your 401(k) account. Compounding interest can’t work for you if there’s no money in your account to compound over time.
I Don’t Need an Emergency Fund
Didn’t you just read about how your arm could fall off?! Of course you need an emergency fund. We all do… unless you have a crystal ball that can predict when things are going to go unexpectedly wrong at the most inconvenient time.
An emergency fund exists to protect your and your finances when an unforeseen expense pops up that must be taken care of, pronto. Do yourself a favor, stop making the excuse, and start establishing one now.
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Are you guilty of making any of these excuses for your bad money habits that are holding you back financially? What are some of the worst excuses you’ve heard?