What you do every day matters. Just as mastering your money can come down to establishing a few smart habits, all it takes is a few costly ones to derail your finances.
CNBC asked financial advisors to share the worst money habits they see people develop, and what to do instead to make 2017 a more prosperous year.
Here are the habits they advise you to break.
There’s more to late payments than simply paying a fee. Missing payments can also lower your credit score, which affects your ability to borrow money for bigger purchases, like a home or car, in the near future.
Never miss a bill again by setting up automatic payments online for fixed costs such as cable, internet, and insurance. For expenses that can’t be paid online, such as rent, set up calendar reminders and pay them at the same time each month so it becomes routine.
As self-made millionaire David Bach writes in ” The Automatic Millionaire,” automating your finances is “the one step that virtually guarantees that you won’t fail financially.”
2. Paying the minimum on your credit card balance
Most credit cards only require you to pay 1% to 3% of your balance each month. Paying the minimum can be a tempting option, especially if your budget is tight, but it will cost you a fortune in the long run.
As Bach explains, paying off an $8,400 balance (the amount the average American owes in credit card debt) on a card that charges 18% would cost you $20,615 in interest . “You cannot become an Automatic Millionaire if you run up credit card balances and pay only the minimum due,” he writes. “All you’ll accomplish doing that is making the credit card company rich while you stay poor.”
In 2017, get in the habit of making payments in full. The easiest way to do that? Arrange to transfer the full amount of money you owe from your checking account to your credit card company every month.
Whether it’s calling an Uber or picking up a pack of gum while waiting in the checkout line, it’s all too easy to spend mindlessly. But that money could be directed toward your savings goals or growing substantially in a retirement account.
“We all have room to set aside a little money for our future,” says certified financial planner Carrie Schwab-Pomerantz . “A good habit to develop in 2017 is to take on a more mindful approach to spending. Start by going cash only for a few weeks: Think about your weekly expenses, go to the ATM, and get cash just to cover the week. It’ll wake you up to where you might be wasteful with your spending.”
If you aren’t ready to ditch your credit cards just yet, try tracking your expenses to get a better idea of where you spend your money and where you can cut back.
5. Paying for subscriptions you don’t use
“Go online and look at your credit card statement. You’ll probably see clubs, memberships, and other recurring expenses in there that you forgot you were paying for,” says Schwab-Pomerantz.
Next, ask yourself which subscriptions you can eliminate and cancel them on the spot to save a couple hundred dollars a year.
7. Putting off saving for retirement
Retirement might seem too far off to start considering, but time has a way of passing.
“Many of us tend to say, ‘I’ll get to retirement savings later,’ or ‘I have all the time in the world,'” Schwab-Pomerantz notes. “Consider the ‘minus 10% rule’: If you’re in your 20s and you put aside at least 10%, you should have a relatively comfortable retirement at age 65. But if you wait until your 30s, you have to save 15% to 20% of your income. And in your 40s, you have to save 30%.”
Enrolling in your employer’s 401(k) plan – a tax-advantaged retirement savings account that allows you to build wealth over time – is one of the simplest ways to invest.
It’s also smart to consider alternate retirement savings accounts, such as a Roth IRA, traditional IRA, or health savings account, as experts say that a 401(k) plan may not provide enough to fund your future.
8. Spending as much as you earn, or more
If you’re spending as much as, or more than, you’re earning, you’re living paycheck to paycheck, which can easily spiral into credit card debt. That lifestyle makes it nearly impossible to build up significant savings.
The solution: Live below your means – not at or beyond.
“You have to establish the habit of spending less than you earn,” certified financial planner Carolyn McClanahan tells CNBC. “Once you create the habit of saving, it stays with you for your entire life.”
10. Only saving money that’s “leftover”
“What most people do when they earn a dollar is pay everyone else first,” Bach explains. “They pay the landlord, the credit card company, the telephone company …”
Don’t save what’s left over at the end of each month, he emphasizes. Rather, pay yourself first. It’s not a revolutionary or glamorous concept, but “nothing will help you achieve wealth until you decide to pay yourself first,” Bach writes. “[It] means just what it says. When you earn a dollar, the first person you pay is you. Most people don’t do this.”
Bach recommends starting simple, by putting at least 10% of your gross income into a retirement account. If you’re not comfortable making a 10% contribution, it’s better to start small, and gradually increase your contributions over time, than not to start at all.