In my own version of the movie “Groundhog Day,” I made the same financial mistakes over and over and over again. But also like Bill Murray’s TV weatherman character, by making several small changes over time, I eventually improved my finances and broke the cycle of fiscal fumbles.
You can too.
Here are three mistakes I kept repeating and the changes I made that gave me a fresh start:
1. Budgets are for real life. After a few months of overspending in my budget categories, I realized I needed to be realistic about things I’m going to do and spend money on in the next 30 days. Super strict budgets don’t factor in that I sometimes forget to bring my coupons to the supermarket and I occasionally order a second drink. A budget has to be realistic. Now I build some flexibility in my budgets.
2. Having the money (or the credit) doesn’t mean I can afford it. Sure, I have room on my credit card to buy a $400 pair of boots. And for years, I thought that meant I could afford them. Credit card balances ebbed and flowed for months before I realized I couldn’t afford to continue charging unless I met one of my most important financial goals: earning membership in the $0 Balance Club. Now I pay off my credit card bills every month.
3. Don’t rely on your plastic in a financial emergency. In my debt payoff journey, I was afraid to put any extra money anywhere except toward my credit card balances. Why should I sacrifice that extra debt payment to a savings account? I didn’t see a need for an emergency fund, and I couldn’t anticipate an emergency that I couldn’t handle with my trusty credit card. And besides, using credit as an emergency fund just creates more debt. Now I’m saving for a rainy day with a savings account.
Now with a realistic budget to guide me, by managing my credit smartly and with an emergency fund that’s growing, I’ve broken my bad money habits. On this Groundhog Day, ask yourself, “What are the credit and money mistakes you make time and time again?” Make some changes, and you, too, will improve your financial future.