7 toxic money habits you should quit

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Bad money habits can be exceptionally hard to break, whether they’re ingrained from your upbringing or stem from a lack of knowledge about personal finance.

Even when you have the best intentions and a strong financial plan, those enduring rituals will continually derail your money success.

For instance, if you’re trying to get out of debt but constantly feel the need to splurge on expensive dinners out to keep up with your friends, it’s unlikely you’ll reach your goal.

Here are seven common ways people habitually mishandle money — and how to stop them.

Emotional spending

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Using shopping to deal with life’s ups and downs is common, Gretchen Cliburn, CFP, director of financial planning at BKD Wealth Advisors, says. But emotional impulse spending doesn’t actually fix anything. In fact, it tends to make things worse, she says. That temporary high you get from buying will inevitably wear off, often leaving you with credit card debt or piles of unneeded stuff.

To avoid making impulsive, emotional purchases, set some ground rules for yourself. For instance, buy items only from a wish list that you’ve made at a time of relative calm, not when you’re trying to distract yourself from anxiety or sadness. Or make yourself wait 24 hours before giving in to an unplanned purchase.

It’s also a good idea to opt out of emails from your favorite stores to reduce temptation, and to buy things only when you can pay cash. If necessary, find someone to discuss your goals with and to hold you accountable, Cliburn says.

Lending money

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While it’s admirable to extend a helping hand, lending money to friends and family members can hurt both your pocketbook and your relationship. It may be difficult for the person to pay you back, which could breed resentment and conflict. Over time you’ll be out the money and the friendship.

Beyond offering a loan, there are many ways to help a friend in need and preserve your relationship, Cliburn says. Look for ways to help your friend find solutions to her problems that don’t involve throwing money at them. For instance, you could offer to give her a ride until she gets her car repaired, or suggest ways to reduce her expenses by sharing your own frugal tips.

If you still want to offer money, consider it a gift. That way you won’t feel resentful when you notice your friend has been buying new clothes and shoes rather than paying you back. If you can’t afford to give the money as a gift, it’s best not to lend it all.

Always picking up the check

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For some people, being able to pay for a friend’s dinner or a round of drinks is a source of pride. But if you’re going into debt (or putting off more important expenses) because you’re always taking care of the bill, you’ve gone too far.

People who pick up the tab on a regular basis find that their friends or family members begin to expect such treatment, which can strain the relationship, Mela Garber, tax principal at New York–based Anchin, Block & Anchin LLP, says. Eventually, it’s hard to determine whether people are going to dinner with you because they like you or because they want a free meal. Want proof? “Just ask anyone who won the lottery how many of their old friends they still have after a year from winning,” she says.

See the rest of the story at Business Insider