Yahoo! conducted a poll to ask readers what their worst financial habits were. The results were illuminating–and some were just plain delusional. Here’s my commentary:
Eating out/Overspending on Food
People like to pay for convenience, but they sense on some level that they’re spending too much. This is common. But if you think this is your worst habit, you’re crazy. You have to eat, and there’s only so much you can (or should) cut from this part of your budget.
Most people don’t want to hear this, but the best way to save money on food is to learn to cook, and then cook your own meals. Basic ingredients are cheap: meat, vegetables, butter, milk. It’s the convenience items that cost the most money. The more work goes into creating that pre-made meal you pick up from the grocery store, the more they charge for it.
I learned to cook a few years ago, and now I’m good enough at it that I really prefer what I make to what you can get in most restaurants. Of course, that’s me. Some people would rather pay for the convenience.
Credit Cards/Bad Budgeting/Living Paycheck-to-Paycheck
These three are basically the same thing: if you budget poorly, you’re going to have to resort to revolving credit sooner or later. Same with living paycheck to paycheck.
What I will say about living paycheck to paycheck is that this survey vastly understates the number of people doing this. You’d be shocked at how few people actually save more than they spend and accumulate money over the years. Most people are waiting on a “big break” to make it easier to get their acts together (spoiler alert: that big break won’t help).
In terms of bang for your buck, these areas are the ones you should concentrate on improving. Interest on credit card debt is monstrously high, and as the article points out, you’re basically paying for nothing. Pay off that debt; you’ll not only feel better, but save a huge chunk of money on the interest.
And by building that habit, you can start to become a net saver and grow richer with time.
Shopping/Coffee/Booze/Misc
These miscellaneous categories are the large charismatic megafauna of personal finance: they attract more guilt than is probably warranted, and everyone loves to list them as personal vices.
If you really have some kind of shopping addiction, then get help. But most people won’t vastly improve their financial lives by cutting this kind of expenditure.
The exception is cigarettes. The health effects are so obvious and catastrophic, and taxes keep making them more and more expensive. If you smoke, you can vastly improve both your physical and financial health by stopping.
Horses/Uber
Huh?
Takeaways
Just looking at the responses, it goes to show how out of touch with reality many people are about their money. More people are struggling with debt than is indicated by the chart. These results are best understood as a lower limit to the proportion of people with out-of-control budgets.
No matter how much money you make, the best thing you can do for your financial life is to make the transition from a spender to a saver. Once that happens, everything else follows.