Personal habits that can increase financial risk
(MENAFN – ValueWalk)
When it comes to things that may pose a risk to your finances, certain activities may immediately come to mind. Investing heavily in high-risk stock options, quitting your job without a back-up plan, or habitually making large, unnecessary purchases are all obvious actions that can certainly affect your finances.
But what about the things you do in your daily life? Surprisingly, common personal habits can also jeopardize your personal wealth. Some of these habits seemingly have nothing to do with money, but can have a major impact in ways you may not have considered.
Contents Pin up
1. Recreational alcohol use
2. Lack of savings
3. Continuous subscriptions that you do not use
3.1. Focus on the day-to-day
Recreational alcohol consumption
When linking alcohol to financial risk, the obvious route is prosecution or criminal charges for misconduct. One danger that may not be as widely known, however, are the long-term consequences stemming from traumatic brain injury. As alcohol is estimated to be a contributing factor in approximately 50% of all incidents of traumatic brain injury, the habit of drinking alcohol can have very real consequences.
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Brain damage can impact your finances far beyond substantial medical bills. If you have a brain injury that causes permanent damage and renders you unable to work, your income could be a fraction of what you are used to. While disability payments may provide meager relief, these payments can take months to initiate and may require multiple rounds of appeals.
Lack of savings
Spending on a monthly basis at the higher end of your monthly income is fine until an unexpected expense arises. The problem with this is the fact that unexpected expenses will arise at some point. Whether it’s a car repair or water damage in your home due to a burst pipe, costs will arise that cannot be delayed.
Americans have become more aware of having funds set aside for emergencies. However, about 51% have less than three months of spending in savings. When unexpected costs arise, it’s all too easy to fall into the trap of high-interest borrowing. This can take the form of credit cards or payday loans. Unless you drastically adjust your monthly expenses, you run the risk of spending long periods of time recouping interest payments.
Continuing subscriptions that you are not using
It can sometimes be comforting to have the option of using something even if you decide not to. Signing up for that gym membership at the start of the year seems like a step in the right direction for overall health, but it does little good other than drain your bank account if you don’t use it. .
Maybe there was a single TV show that you were excited to watch and signed up for a streaming service. After you finished watching, did you find anything else on this streaming service? Does it appear as a recurring monthly charge on your credit card without being used?
Many services start with an introductory free trial that requires you to enter payment information upfront. This is a savvy business strategy as it is very easy to forget that payment is due after 30-60 days. Even if you remember, you still have to take the time and effort to call or log into your account to cancel. If you don’t regularly check your credit cards and bank accounts for automatic payments, you could be wasting huge amounts of money each month.
Whether you put a cap on subscriptions and other memberships as part of your annual family budget or just check that you’re using the ones you pay for, get into the habit of not throwing away money.
Focus on the day-to-day
Financial difficulties don’t always stem from the fallout of failed business deals or a drop in investment. Much of the success of financial stability comes from daily habits. To avoid unforeseen difficulties in terms of personal wealth, it is better to adopt good habits and not take unnecessary risks.
Updated January 21, 2022 at 11:40 a.m.
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