7 bad habits robbing you of a comfortable retirement

By Maria Smit*.Far too often we overcomplicate our thinking about how to accumulate enough wealth to fund our retirement. Sometimes just the thought of saving your whole lifetime for a future that seems very far away can be overwhelming..But managing your money well often means knowing what not to do just as much as knowing what to do..What you should do is put away as much as you can afford while you're earning an income so that you can continue to live comfortably when you're retired. There are obviously more complex questions you need to ask to get to a personalised strategy, but it's only by investing during your working years that you'll have enough when you've stopped working..Quite often, a failure to save enough for retirement is because bad financial habits misdirected money you could have saved into paying off debt. That's an easy trap to fall into, which is why I've compiled a list of 7 bad financial habits that I see people making that keeps them from true financial freedom..1. Living beyond your means.Constantly spending more than you earn means you're getting further into debt and possibly financial trouble. It's tempting to want to keep up with the Joneses next door, but it's not worth the financial stress that comes with it. To avoid this, start by creating a budget to track your income and expenses. This will help you identify areas where you may be overspending and where you can cut back..2. Not saving money.Failing to save money for emergencies, retirement or other long-term goals can make it difficult to build wealth and achieve financial stability. Prioritise saving by making it a habit to regularly save a portion of your income. Start small and gradually increase your savings as you become more comfortable. Putting it in an investment instead of just your bank savings account also makes it more difficult to use it when you feel like impulse buying..Read more: Take action to prevent rate hikes derailing your retirement savings.3. Impulse buying.Buying big ticket items on a whim might feel exciting, but it's also putting your financial security at stake. Unplanned purchases can easily lead to overspending and accumulating unnecessary debt. Rather, take time to think about whether you really need it or whether it's just an impulse buy. One great way to beat your impulses is to turn off notifications from online shopping platforms that constantly bombard us with deals too good to ignore..4. Not budgeting.Without creating and following a budget, it's very difficult to manage your finances effectively and spend within your limits. There are many online and mobile apps that help you to get a better grip on your finances. Some use your actual spending to track what you're spending your money on and can alert you if you're overspending, This will help you identify areas where your spending may have been a little impulsive and where you can cut back..5. Ignoring debt.Debt can be a huge burden if you've fallen behind on payments, and can seem like a never-ending spiral that you will never control. But you can, and you should. Short-term debt usually carries higher interest rates, which is money that you should rather be using to save for your retirement. So, put together a plan to pay off your short-term debts as quickly as you can. Focus on paying off high-interest debt first and make sure to pay your bills on time to avoid late fees and additional charges..6. Over-reliance on credit cards.Relying heavily on credit cards to make ends meet is a major cause for high-interest debt burdens. Make it a priority to pay off your credit card balance in full each month to avoid paying interest charges. If you can't afford to pay off your balance in full, cut back on using your credit card or find ways to increase your income to settle your debts faster..7. Not investing.As already illustrated, paying off debt rather than investing for your retirement is a major cause of financial stress that prevents many from investing properly for their future. By investing your money in the market, you can take advantage of the power of compounding to grow your wealth over time. Yes, the market does come with risks as prices rise and fall, but you can ride out that volatility of you diversify your portfolio and invest for the long term..Read more: What to do about life cover when living abroad.I'm sure you'll agree that what I've shared here is not shrouded in mystery. By being financially aware, you can keep your short-term finances in check so that your long-term future is secured. Remember, it's never too late to start making positive changes to your financial habits. Start small and make it a habit to make good financial decisions every day..Maria Smit CFP® professional is an advisor at Brenthurst Pretoria maria@brenthurstwealth.co.za

7 bad habits robbing you of a comfortable retirement

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