How to Stop Sabotaging Your Finances

It’s no secret everyone wants to be successful and smart with their finances, but the reality is that loans, responsibilities, medical bills, and crippling student loan debt greatly affect us in emotional and physical ways for extended periods of time. When you feel like your back is against a wall with your debts, you find subtle and not-so-subtle ways to sabotage your own process. Here are a few tips to stop sabotaging your finances:

Assign a “job” to every dollar you make.

Part of the reason your finances may be in disarray is because you have expendable income that doesn’t have a set purpose. This can make you more prone to impulse buys, extravagant daily spending, or poor planning in favor of short term satisfaction. When you give each dollar you make a job, as several schools of thought in financial planning say to do, your money has a purpose. That “extra” $100 of wiggle room immediately goes into emergency savings, or $50 will go into a vacation fund.

Contribute more to retirement.

If you’re taking home a sizable paycheck and you’re still contributing the minimum to your retirement or 401k savings, you’re depriving yourself of money in the future. Financial planners recommend being more aggressive with your retirement fund earlier in life so you can contribute more during the years where your return on the compound interest will be higher. If you find yourself making silly purchases, buying new things every week, or not saving, automate an increased percentage of your take-home pay into retirement. You won’t even miss it.

Save up 3-6 months of expenses.

Most people never get to this crucial step of financial wellness, which gurus like Dave Ramsey swear by. Saving an emergency fund of 3-6 months of living expenses is hard, but it’s one of the best ways to stop sabotaging your finances because of the freedom and peace of mind you’ll have with a fully stocked emergency fund.

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