Everyone is guilty of a bad habit or two.
But it's not your addiction to Candy Crush or your refusal to recycle grocery bags that worries us. It's the habits that damage your finances — from overspending to procrastinating about paying bills — that set off our alarms.
Here are 9 of the most common bad money habits that they see — and then offer their expert advice for breaking them in 2014.
1. Buying Lunch ... and Coffee and Snacks Everyday
If you live or work in a city (or your commute brings you past five different drive-thrus), buying lunch out can be irresistibly easy — and problematic if your habit starts absorbing the money you'd prefer to save for something else ... like a Caribbean vacation to escape the frigid cold this month.
How Much You Can Save: If your lunch-buying habits are anything like that of the typical American, you probably buy a lunch that costs around $10 twice a week, spending about $1,000 a year in the process. If you cut your habit back to one lunch per week, you could save around $500.
2. Neglecting to Get the Best Rate
Sure, paying your bills on time is a good habit — but paying more than you should is a bad one.
How Much You Can Save: "Lowering your bills is a great way to find extra dollars for your goals without having to sacrifice your lifestyle," explains Taylor. If you can negotiate only $10 off your monthly bills, you'll save $120 a year. If you go a step further and cancel your cable to save $100 a month, that comes out to $1,200 a year. Put that cash into a retirement account and you could help grow your savings!
3. Not Prioritizing High-Interest Debt
All debt isn't equal. So while you should always pay the minimum on your various debts — be it student loans, credit cards or a mortgage — a more productive strategy is "racking and stacking." Essentially, you rank your debt in order of highest to lowest interest rates, and prioritize paying off the debt with the highest interest rate first by devoting any extra cash toward that debt. Once it's paid off, you move down the list to pay down the next high-interest debt.
How Much You Can Save: If you're sitting on a $10,000 credit card balance with 12% interest, you're paying $100 in interest a month (and that's a pretty low interest rate). Since most lenders require that you pay at least your interest every month, you'll need to pay more than $100 a month in order for your balance to start decreasing.
4. Neglecting to Take Advantage of a 401(k) Match
A 401(k) is an employer-sponsored retirement account, and some companies actually give you money just for using it, which is known as a "match."
How Much You Can Save: While every company's matching policy is different, let's assume that your employer matches every dollar that you contribute up to 3% of your annual salary. If you make $60,000 per year, not contributing to your 401(k) costs you $1,800 per year in matching contributions. Over 30 years, at a 7% rate of return, that $1,800 per year comes out to a total of $170,000!
5. Carrying a Credit Card Balance
While there's nothing wrong with responsible credit card use, if you can't pay your entire bill on time (also known as carrying a balance), you'll get penalized in the form of interest, which just adds to your debt.
How Much You Can Save: The average household carries a credit card balance of over $7,000. In December 2013, interest rates were about 15% for the average credit card account. Carrying that average balance, at that average rate for one year, will cost you $1,133 in interest charges.
6. Paying a Premium for Your Vacation
There's a reason why it costs a fortune to visit the South of France in July — everyone wants to vacation there in the summer. But you can cut down on those peak season costs by planning a trip during a region's "shoulder season," or the months that fall just before and after peak visiting time. Another alternative: Go somewhere similar, but more affordable — like these budget-friendly alternatives for a number of iconic getaways.
How Much You Can Save: Of course, your individual figure depends on a combination of the destination (Brewer herself saved $1,500 by taking an anniversary trip to Costa Rica instead of a pricier Caribbean island), airfare and lodging. Let's revisit our South of France example: By traveling in May instead of June, you can save more than $50 per night at an upscale hotel in Nice, France. For seven nights, that's an immediate savings of $350.
7. Saving Your Savings Goals for Last
Many of us are in the habit of paying outside bills and obligations first, and then relegating any leftover cash to savings, whether it's for an emergency fund, a wedding, a down payment on a home or a trip abroad.
How Much You Can Save: The great thing about paying yourself first is that the potential for saving is just about limitless. If, for instance, your goal is to save $10,000 for a wedding over the course of two years, you'll need to automate about $417 per month. So you'll set up your automatic transfer for that base amount, and if you get a raise or your living costs go down and you rebalance your budget, you can increase your savings amount.
8. Overpaying on Entertainment
We're all probably guilty of this potentially budget-tanking habit: A coworker tells you about this amazing new book that he's reading, so you pop online and download it to your Kindle. The next day, your cousin emails you about a movie recommendation, so you order it from Amazon. Sound familiar?
How Much You Can Save: Let's say that you're a modest reader and movie-watcher who downloads two films a month from iTunes and three books a month for your Kindle. At approximately $15 per movie and $10 per book, you're laying out $60 a month. If you were to sign up for Amazon Prime instead — which also allows you to read free books with your membership — for $6.50 a month, you'd save $641 over the course of a year.
9. Setting and Forgetting About Your Savings
It's great that you're contributing to your retirement and savings accounts — but it's even better if you're automating those contributions. That said, you shouldn't simply "set and forget" your contributions.
How Much You Can Save: If a person with 37 years to go until retirement increases her savings contribution by just an extra $50 each month, she could ultimately save another $105,000 (assuming a 7% annual growth rate) by the time she retires.
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