For some of us, improving our financial health means exchanging our current financial habits for new spending and saving decisions. The first step to creating change is learning what behaviors are keeping us in a cycle of financial uncertainty and holding us back from achieving our goals. Avoiding these common financial mistakes will help us break out of the cycle enabling us to build slack, reduce stress and improve our financial health.

Spending more than we earn. Spending more than we earn means we are accumulating debt or taking from savings. Spending as much as we earn means we are living paycheck to paycheck. To be in a good financial situation and build slack, we need to spend less than we earn. Living this math can be hard. This may mean changing our lifestyle to cut back on spending or increasing our income to earn more. Creating a spending plan will keep you organized with your money and help you decide what works best for your needs.

Spending money we don’t have yet. Spending money we don’t have can lead to debt accumulation and accrued interest or fees, all of which can cause stress and derail our financial plan. Saving for a purchase until we have the cash is proven to cost less in the long run and help us reach our financial goals faster. A good practice is to limit credit card purchases to what can be paid off that month in full.

Paying only minimum payments. When making payments on credit cards, paying the minimum payment every month means paying more than the original purchase price. The best way to manage credit card debt is to pay off the full balance each month. If you already have credit card debt you want to tackle, learn the best ways to pay it off. *learn will link to blog about debt repayment strategies going live in June*

Unchecked spontaneous spending. It may not seem like a big deal to spend $7 on lunch and $3 on coffee five days a week but when looking at the big picture, that adds up to $50 per week which is $2,600 per year. Then factor in additional “small” purchases like ordering in for dinner and that total will increase quickly. If you plan to purchase spontaneously, account for it in your spending plan.

Relying on credit in an emergency. When we use credit cards instead of a dedicated emergency fund, we could be adding interest on top of an already unexpected expense. Instead, put money away each month in emergency savings not to be touched until absolutely needed. In the event that you do have to use your credit card and are concerned about paying that money back, make an appointment with a Member Relationship Specialist who can work on a plan with you to get back on track.

Ignoring bills once they’ve been automated. Automating bills is an efficient way to make sure that everything gets paid for on time. Reviewing monthly statements is still important to make sure there haven’t been any unauthorized charges on your cards. Check for automated subscriptions you may not use anymore as well.

These financial mistakes are considered common for a reason. Many of us have been making them and might not even realize we’re doing it. It’s important to remember that behavior change takes lots of time and patience. As always, we’re here to help in any way we can.

To get started, take our 2-minute financial health quiz and receive immediate results showing the areas where you can most improve your financial health and how to start.