Everyone makes mistakes. But some have more dire consequences than others. While the occasional dinner out or spending money on lattes (is this still a big deal?) may set you back a bit financially, it’s not the end of the world.
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There are some money habits though, that if not kept in check, could ruin your financial future. Here are three of them, and what habits you can replace them with instead.
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Save What’s Left Over After Spending
While committing to saving after accounting for your spending sounds great in theory, the truth is that it may not be the best move. Maybe you have larger than expected bills for one month, or you decide to take your friend out for dinner.
All of this spending adds up, and you may find that you’ll have nothing at the end of the month to go towards savings.
Instead, consider a popular method called “pay yourself first.” Here, you set a savings goal, whether a percentage or a fixed dollar amount. Then, at the beginning of each month, or whenever you get paid, you transfer the savings to another account. Whatever is left over is for you to spend, guilt-free.
That way, you know you’re consistently reaching your savings goals.
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Forgetting About Ongoing Maintenance Costs
Budget is just as much about understanding your spending now as much as projecting or estimating the amount you’ll spend in the future. Forgetting about future costs like maintenance for large ticket purchases can wreak havoc on your budget.
For example, when you buy a car, ongoing expenses include regular oil changes, replacing or rotating tires and any repairs. Even smaller items like a bicycle also need ongoing maintenance.
To help you understand what the “true” cost of an item you’re about to buy could set you back, do an online search to look at average estimated costs for maintenance.
Data from Kelly Blue Book found that average repairs cost car owners $838 each year, though different models may cost more. Consumer Reports is a popular trusted source, and frequently conducts research on various car brands and ranks them according to repair and maintenance costs.
Once you understand what you could pay, factor them into your budget to see whether you can truly afford the item.
Not Having a Buffer Amount Set Aside
A buffer amount is extra funds in your checking account or a savings account you regularly access for higher than planned expenses for any given month.
Maybe you turned on your air conditioning unit more than usual during a heatwave, and your utility bills are higher this month. Or, you had money set aside for your car insurance payments, but you forgot the insurer raised their premium prices, and now the bill is due in a week.
Having the extra amount can help you account for these types of expenses so that you don’t have to worry about overdraft fees or relying on your credit card to make on-time payments.
As for the extra amount you need to set aside, you don’t need as much as what you would in your emergency fund. Even having an extra $100 to start is better than nothing.
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This article originally appeared on GOBankingRates.com: 3 ‘Normal’ Money Habits That Could Ruin You Financially — What to Do Instead
