Bad Financial Habits that Endanger your Retirement

Money is hard to come by, especially as you grow older. Employers are more likely to favor younger and more robust people, and the old are likely to see fewer promotional opportunities, or none at all. What bad financial habits endanger your retirement? Being aware of these habits is the first step to take to prevent yourself from being hurt indefinitely financially and risk prolonging your working life. Being financially literate and knowing about bad financial habits that endanger your retirement is important.

Buying on credit without restraint

If you have self-control, and stick to a well-planned budget that many cannot do so, a credit card can bring you certain advantages and save you some money. However, more people have had their fingers burnt using a credit card than actually gaining from it. It is easy to not keep a daily tally on the amount you have paid using your credit card and end up with a sum greater than your monthly salary. Because a credit card may not be usable at certain shops and for certain utilities that you need, you end up having different expenditures that you need to tally. Moreover, signing for your purchases can become an addiction, a certain sense of power, especially when you are the supplementary card user who does not bother to check out your expenditure. You can land the principal card holder in the worst credit card debt in the long run.  

Taking massive loans

When a loan or down payment plan is utilized, there is payback time. You need to know how much you will have to pay every month, and make sure that your income can make the installment payments and not cause a cash flow problem. Often, people do not envisage themselves losing their well-paying jobs. It is difficult to finance a loan when you find your salary halved or taken away due to an economic recession.

Unwise investing

It is dangerous being uninformed and blindly following the crowd in investments. Even if someone has made tons of money investing in a company, be in the know of its history. You also need to know when to let go of the investments. Too often, you might hold on to an investment for a month more, hoping to make an extra dollar, and when you least expect it, the company goes down the drain and you lose more than you put in initially.

Not having a savings plan

If you do not have insurance or endowment that provides for your post-retirement days, you need to save hard for a rainy day. In certain countries such as Singapore, workers are required to deposit a portion of their money into a plan to provide for themselves after retirement. It is important to train a child from young to not spend what they do not have, and to save wisely.

Careless spending

Even with a great savings plan, there must be careful consideration in budgeting and spending. More often than not, people spend based on a daily need basis, and forget to budget off their money for the rest of the month or till their next payday. Then the credit card bill arrives, and all hell breaks lose because they do not have the money to pay for it. Take a look around your house, and you will probably locate items that were purchased on impulse and are then chucked in a corner because you actually do not need them.

Not having a budget

Having a budget and sticking to it will help prevent you from spending all your money unwisely, and hopefully have a little bit to stash away for a rainy day. It is dangerous to assume that your job is a golden rice bowl that can not be taken away from you. Have a budget that enables you to save as much as you can, yet enjoy a little here and there. Another pocket drainer is unplanned for dinners, celebrations and impulsive buying. Have a portion of your money saved into a special account for such expenditure. In that way, you will never find yourself in debt simply because you did not foresee certain expenditures.

Retirement is supposed to be something you look for, and the cost of living is unlikely to fall. It is therefore important to live frugally and to spend wisely. Delayed gratification is something that few are blessed with. With Internet shopping at the touch of some icons and the use of plastics and online-payment via credit card, it is easy to make snap decisions that eat into money that you should be keeping aside for your retirement. Therefore spend some effort becoming financially literate and avoid falling into financial bad habits that endanger your retirement.