4 Money Experts Reveal the No. 1 Bad Habit You Need To Break in 2024
Making financial New Year’s resolutions come true is all about getting into good habits — but it’s also about getting out of bad ones.
People can’t control high prices and expensive loans, but they can control the money moves they make, and many of them spent 2023 making the wrong ones.
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GOBankingRates spoke with financial experts from varied backgrounds to learn about the No. 1 bad habit they want to see people break in the new year. If any of these sound familiar, a change in behavior could put more change in your pocket.
Impulse Shopping
Instant-access online shopping makes it easier than ever to buy without thinking, and payment options like Buy Now, Pay Later can conceal the financial consequences of spontaneous purchases — none of which makes for healthy personal finances.
“The No. 1 bad money habit I want to see people break in 2024 is impulse spending,” said Carter Seuthe, CEO of Credit Summit. “Since the start of the pandemic, I would say that impulse spending, specifically with online shopping, has significantly increased. Even with tighter budgets and the awareness of this being a bad habit, so many people today are quick to make an online purchase because of what they see promoted on social media.”
Ordering food without thinking on an empty stomach is just as easy and just as detrimental.
“People are much more impulsive with delivery services like DoorDash or Instacart,” said Seuthe. “The convenience of these apps leads so many to put in an impulse order, even when the extra fees and tipping essentially double the price. All of this quickly leads to overspending, which can put people large steps behind on important financial goals, like getting out of debt or saving up for a down payment.”
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Toxic Debt Accumulation
According to the U.S. Government Accountability Office, credit card debt reached record highs in 2023, with cumulative balances topping $1 trillion. Many cardholders owe more than $1,500 and carry a balance for at least a year.
High-interest debt is a financial boat anchor around your neck, and piling it up without a strategy for getting out of it is a pattern that defined 2023 for many consumers.
“The biggest bad money habit I’d like to see people break next year is allowing debt to accumulate without having a plan to pay it off,” said Leslie H. Tayne, financial attorney and founder and managing director of Tayne Law Group, P.C. “The cost of living is at an all-time high, and many Americans have had to rely on credit to get by.
“However, many others see credit as an easy way to fulfill their wants now and delay the responsibility of paying for it. Especially in this high-rate environment, it’s important to keep consumer debt to a minimum. Otherwise, it can negatively impact your other financial goals, including saving, investing, homebuying, paying for education, and more. In 2024, I’d like to see people be more discerning about what types of debt they take on and devise a strategy for paying down existing debt, even if that means missing out on credit card rewards or the latest tech.”
Failing To Leverage the Earning Potential of Credit Cards
High-interest revolving debt is a financial curse, but it’s not the credit cards’ fault. In fact, responsible usage — spending according to a plan, paying off your statement balances in full every month, etc. — can help you get ahead.
“When using a credit or charge card, you’ll usually have the opportunity to earn cash back,” said Radhika Duggal, CMO of savings and earnings at Super.com and consumer behavior professor at NYU. “Rewards are really maximized when you use cards that offer additional savings at certain merchants.”
For example, the Bureau of Labor Statistics reports that the average household spends $6,081 per month or $72,967 per year. If you put $44,000 of that on a card that pays 2% unlimited cash back, like Citi Double Cash or Wells Fargo Active Cash, you’d have $880 at the end of the year. The National Retail Federation says the average consumer will spend $875 on the holidays this year, meaning that with responsible credit card use, the bank will cover your gifts, parties, decorations, food and the rest at year’s end.
But there’s another benefit to charging your purchases, too.
“If you pay with a credit card and you don’t incur debt, you will be positively contributing to your credit score,” said Duggal.
That could save you far more than $880 over time by getting you better loans at lower rates on a home, a car or anything else you finance.
Putting Off Saving for Someday for Another Day
Money is tight, prices are high and people are struggling — but if you don’t treat saving for the future as a bill that must be paid, you’ll miss out on the tax advantages of retirement accounts and squander precious years of compounding.
“The worst money habit to break in 2024 is not investing at least 10% to 15% of your gross income for retirement,” said Laura Adams, MBA, an award-winning personal finance author and expert with Finder. “That’s essential for everyone, especially the 24% of Finder’s Consumer Confidence Index respondents who said they’re underprepared for retirement and 12% who said they’ll never be able to retire.”
Even that dour analysis might be generous. According to a CNBC poll, 56% of Americans are not on track to retire comfortably — and that won’t change until their habits do in 2024.
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This article originally appeared on GOBankingRates.com: 4 Money Experts Reveal the No. 1 Bad Habit You Need To Break in 2024
