How to Break Bad Financial Habits

Many of us have bad habits when it comes to managing our finances. Whether you’re struggling to pay your bills and save for retirement or just don’t pay attention to these important money matters, you could be setting yourself up for trouble down the road. Read on to learn to how break the most common bad financial habits.

Bad Habit: Paying your bills after the due date

Good Habit: Pay your bills on time.

One of the most important factors when it comes to having a good credit score is paying your bills on time. By law, the due dates on credit cards must be the same each month, and cardholders must be given at least 21 days to pay each bill. So, put payment due date reminders in your phone, write them down on your calendar, or do whatever it takes to remind yourself of these recurring deadlines. If you find yourself paying late-payment fees or bargaining with collectors, try to make it a priority to change this habit.

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Bad Habit: Paying only the minimum on credit cards

Good Habit: Aim to pay as close to your monthly balance as possible.

If you only pay the minimum required on your credit card bills each month, you will continue building up interest until it eventually becomes too much for you to handle. Don’t go down this road. Instead, aim to pay as close to your monthly balance as possible. By law, credit card issuers must disclose the consequences of making only minimum payments each month—specifically how long it will take to pay off the entire balance if you make only pay the minimum. Heed this warning.

Bad Habit: Ignoring your bills and letting them go to collections

Good Habit: Deal with your payments now instead of later.

Now is almost always better than later when it comes to paying your bills. Letting an unpaid debt go to collections could damage your credit and even land you a date in court if it isn’t handled properly. A debt can be considered delinquent after just 30 days of nonpayment. After 180 days, many debtors sell the debt to a collections agency in an effort to recoup at least some of what is owed. Debt collection accounts can stay on your credit report for up to seven years, so pay the debt as quickly as possible. Your credit score will bounce back faster if you continue to pay all your other bills on time.

Bad Habit: Putting off saving for your retirement or for a rainy day

Good Habit: Build your fund slowly but surely.

It’s vital today that people put aside a percentage of their income for retirement. Invest your money into a 401(k) or store away money each month into an individual retirement account (IRA).

RELATED: Roth vs. Traditional IRAs: Which Is Right for You?

You don’t need to throw thousands into these accounts. It all depends on the age at which you start your retirement savings, but a 2015 survey by the Empower Institute, the research arm of the retirement services provider Empower Retirement, found that people who saved 10 percent of their income and did not withdraw their money early were on pace to have enough money to live comfortably in retirement. If that’s too much for you, find a comfortable amount to start with that can be increased as your income increases.

Bad Habit: Shopping impulsively

Good Habit: Plan your purchases.

Who doesn’t enjoy some “retail therapy” now and then? While taking an impulsive shopping trip can make you happy momentarily, it can cause a lot of unhappiness down the road. If you need to get your shopping fix, do it as wisely as possible. Try comparison shopping—looking at multiple retailers before making a purchase. Or follow the time rule: If you want something today, wait 30 days (or another set amount). If you still want the item after your self-imposed waiting period, go for it. Also try to plan your purchases ahead of time, especially if you know you’ll need to make expensive purchases in the near future.

Bad Habit: Not keeping track of your debt

Good Habit: Keep your receipts and statements.

No one likes to think about their debt, but if you’re not thinking about it then you’re probably not keeping track of it. And tracking your debt is a great way to make strides toward paying it off. Create personal files for all your receipts, bank statements, loans and bills to make sure you stay on top of the ball. There are also a number of software programs (Debt Quencher, Quicken Personal Finance, Intuit Mint) and phone apps (DebtTracker Pro, Debt Payoff Planner and Calculator, Debt Free) that can help you stay on top of what you owe and put you in the mindset to pay it off faster.