What You Should Stop Doing With Your Money in 2023

Ring in the new year with a better money mindset and say goodbye to the financial practices that no longer serve you.

Has your relationship with money become a little toxic? It happens to the best of us. And this past year was no exception.

Developing a better relationship with money starts with adopting healthier habits. After all, bad money habits can impede our best-laid plans. Every year brings us a little closer to our longest-held dreams. Unfortunately, another year can also mean more debt that is suddenly even more unmanageable. Break the cycle with the future in mind.

Even if you’re not the type to make resolutions, ‘being better with money’ is a goal worth keeping, and there’s no time like the present to set it. Look at your financial situation as it stands. What do you wish looked differently? That’s a good place to start.

Budgeting Blindly (or Not Budgeting at All)

Out with the old year and in with a new budget. Figuring out where your money is going may be the first, most crucial step. No matter what, it will have a lasting impact. Once you see where improvements are needed, you can set your sights on a more financially stabilized tomorrow. But setting up a budget is just the beginning.

This year, have you been blindly budgeting? Or rather, are you making educated guesses about what you can spend without setting any clear boundaries and limits? Maybe you have a clearly defined budget written down, but you’re not sticking to it consistently (or at all). If this is the case, you’re not really budgeting.

When it comes to your long-term and short-term goals, a budget will keep you on track. Look at your spending this past year alone. It can help you figure out where tweaks to the budget are most needed. And if you need a little more guidance, these are the best budgeting apps in existence right now.

Young woman staring at a piggy bank

If you’ve never built a budget before, that’s okay. There’s never a bad time to start keeping track. You just need to set up a budget that works for you and then commit to it. There’s no one way to go about it, so explore the best budgeting methods and see what’s manageable. You’ll be most likely to stick to the budgeting strategy that best suits your needs.

Start by doing the math. See when your money has been coming in every month, where it’s gone, what you could’ve lived without, and what you can’t. Assess your goals and how long it will take you to achieve them. Are you looking to get out of debt? Build your budget around it, and always keep an eye on your spending. Your spending habits will play a major role in what your budget looks like and whether or not you’re actually able to stick to it.

Spending For The Wrong Reasons

How much money did you spend on things you didn’t need last month? How about this year? If you’re spending your cash without doing the monthly math, consider your budget a much-needed map that will point you and your money in a better direction.

According to one study, Americans spend nearly $18,000 annually on average buying nonessential things, and superfluous spending can really add up. That comes to over a million dollars over the course of one lifetime and around $50 a day.

online shopping with boxes with shopping carts on them

Nonessential spending was at the root of hundreds of Americans’ money problems last year, with many having significantly less money to put toward essential items. Many are still struggling to pay their mortgage or rent while collecting more credit card debt. And as of this year, more than 55% of Americans are behind on saving for retirement.

You don’t have to do away with all nonessential spending to develop better money habits moving forward. But you do need a strong sense of exactly what you can spend, what you can’t, and what’s worth letting go of. Never used that gym membership you purchased as last year’s resolution? Now’s the time to cancel it.

Living Beyond Your Means

Money gurus say that if you’re guilty of doing this one, it’s the only goal you can afford to focus on. But you’re not alone in that. The cost of pretty much everything continues to go up, and nobody’s lifestyle is off-limits. Per CNBC, “at the start of 2022, 64% of the U.S. population was living paycheck to paycheck, up from 61% in December and just shy of the high of 65% in 2020.”

No matter how unavoidable it may feel, living beyond our means can cause bigger problems eventually. It can also provide a false sense of comfort by allowing a lifestyle we can’t actually afford.

Bankruptcy - Business Person holding an empty wallet
Adobe Stock

If you’re living beyond your means, getting serious about saving money can feel impossible. But you cannot improve your long-term financial health without setting money aside.

Don’t fall prey to this vicious money cycle. Starting today, establish what you can actually afford and make all necessary financial changes right away. For many, this will mean being on a much tighter budget. But it’ll all prove worth it when you wind up earning (and saving) more than you’re needlessly spending.

It may also help to start tracking your expenses to see where you’re money is really going. Alongside your current budget, this can help get your spending in check by showing you just how beyond your means you’re really living.

Not Having an Emergency Fund

We never know what the future holds. And so, we never know when an emergency will arise or how much it will cost. That’s why it’s key to be prepared for anything.

You may not see an emergency fund as essential today, but that’s one mindset worth shifting with the future in mind. Without an emergency fund in place, your financial situation could potentially be impacted for years to come. So even if you just put back $5 a day, start saving ASAP.

money in buoy/life raft concept

Emergencies can happen at any time. We all know that. Still, various studies have shown that 25% of Americans have yet to build an emergency fund, and they hadn’t saved so much as a dollar in 2022.

You shouldn’t have to choose between paying a recurring bill and repairing a flat tire. So if you only afford to create one savings fund at this moment, start with an emergency fund. Consider it an essential cost. Build your revised budget taking everything into account, namely, the recent past and unforeseen future. The rule of thumb is to create an emergency fund that comes to six months worth of living expenses.

Relying Too Heavily on Lines of Credit

Think back. Did you find yourself relying on credit cards to foot the bill when you couldn’t? This always leads to trouble. Frivolous credit card spending is an alarmingly easy habit to adopt. Swiping left and right is easier than before, and running up high-interest debt can be incredibly difficult to get out of.

Make 2023 the year you stop spending money you don’t really have. It might take you a while to fix lasting damage to your credit scores. Some ultimately have to file for bankruptcy. But don’t despair. Even if your credit card spending has been out of control in years past, there are all sorts of options to turn even the direst financial situation around and pay it off.

cutting credit card

You need to build a budget that keeps your income and expenses in balance. When it comes to credit cards, make sure your budget includes whatever the minimum payment on your credit card debt comes to, and then see if you can pay a little more. The minimum payment might seem like enough, but paying a little extra can help you keep your payments lower, and paying in full could you put a stop to mounting interest charges.

If you’re a serial swiper, it’s time to stop using your credit cards so often. Learn to live by “out of sight, out of mind,” and see if it helps. Try leaving all credit cards at home more often than not. Put them in a locked box on the top bookshelf. The key is making them less accessible. No matter how simple it sounds, this little mind trick can do wonders, especially when it comes to steering clear of impulse spending during post-Christmas sales.

Always Paying Bills Late

Once in a while, we all get into a financial pickle and have no choice but to pay a bill or two late. However, making late payments is always a bad idea.

In most cases, your credit score is definitely going to be affected, especially if you are a repeat offender. So take control of the damage that’s been done by starting anew. In other words, prioritize paying all of your bills on time.

man looking at bills

Don’t cost yourself more money in late fees and interest charges than you can afford. In 2023, make late payments a thing of yesteryear. Start by getting financially organized right now. What will it take to not miss a payment? Look to your budget for answers.

Make tweaks that allow you to stay on top of your debts every month. Also, if you tend to forget when your due dates are or you are prone to procrastination, enroll in auto-pay. It’s an easy change that can improve your credit over time and alleviate the stress that comes with remembering to pay bills on time.

Leaving The Future Out of Your Current Equation

What does your future look like, financially speaking? More importantly, what will it cost overall? Are you planning on buying a house? What about retirement? How long before your kids go to college? No matter how the future unfolds, if you haven’t been planning for it, you’ve been making a mistake.

There’s beauty in living in the moment. Time can’t change that. But there’s a big difference between being carefree and careless. This applies to your financial future as well. Don’t let the present moment overshadow what comes next. To truly take care of yourself, you need to prepare for unforeseen costs and a period of your life when you can stop working when you want to – and when you need to.

coins in glass jar representing retirement fund

While you still have time, build a budget that leaves room for the future. In other words, it’s time to start saving. If you think you have nothing to put back right now, start by trimming the excess. Look to your expenses and spending for answers. Where can you cut costs right this minute? If you want or need to earn more to save, a raise would be helpful, but it may not be an option. Never underestimate the lucrative power of a side gig. Just make sure you have time in your schedule.

If possible, talk to your bank about automating your savings today. This step will make it so that a percentage of your paycheck starts going into your savings account and potentially earns interest. It will also take a hefty chunk of the responsibility off your hands.

One of the most important steps to take is to find immediate ways to secure retirement funds. If you qualify, take full advantage of your employer’s 401k. If you don’t, look into building an IRA. The options for building a secure nest egg are endless. Although, saving money isn’t easy. The sooner you adopt healthier habits, the easier saving will become. So raise a half-full glass to the future, and don’t delay.

Read More: Retirement investing Advice You’ll Wish You Heard Sooner

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