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3 Using habits that ruin your chances of retirement – The Motley Fool



Retirement is a dream many people simply cannot afford, as savings prices are depressingly low. Half of adults aged 55 and over have no pension savings, according to the US Government Accountability Office, and only 28% of US adults are considered financially healthy, researchers from the Financial Health Network found.

Of course, part of the reason it's hard to save is because there's not enough money to go around. The median earnings for those 25 years and over are about $ 50,000 per year, according to the US Bureau of Labor Statistics. When you have a seemingly endless list of bills to pay, the money doesn't go as far as you want.

That said, even if you have a tight budget, you can stretch every dollar. And even if you think you don't have the money to save, there are some common expenses for spending that could harm your financial health.

  Young man with money flying out of his wallet.

Image Source: Getty Images. 19659006] 1. Buying things just because they are on sale

It's easy to get caught up in a sale. When you see the magic "50% discount" or "buy a few one free" phrases, it's tempting to buy something just because it's on sale. If you really need that item then there's nothing wrong with taking advantage of a good discount. But if you buy it now and hope you use it later, you just drop money.

The average American spends about $ 450 per month on impulse purchases, according to a Slickdeals sharing platform survey. It is around $ 5,400 per year, or $ 324,000 over a lifetime. Almost two-thirds of those who act impulsively said they did so because they got a good deal on the item, and 40% said they had bought something on impulse, just because they had a coupon for it.

Again, if these purchases are items you actually need, there is no damage in the hunt for an appointment. But unnecessary purchases can result in much lost potential. Instead, if you put $ 5,400 a year, you can use impulse purchases against your savings, the money could go a long way toward retirement. For example, say you save $ 5,400 a year on a pension account that earns a 7% annual return. Over 30 years you will have around $ 510,000 stashed away.

2. Don't Pay attention to the little things

You can justify spending money every month on "small" costs and thinking about $ 10 here and there certainly won't hurt. But these costs can quickly add up, and before you know it, you spend hundreds of dollars a month on "small" things.

These little things can include costs such as subscription services, takeaway, a gym membership you rarely use etc. Individually they cannot add up to very much. But combined – especially when considering how much you spend in the long term – they can make it difficult to save for the future.

To find out if you're struggling with these seemingly lesser expenses, take a fine tooth comb to your budget. You can either print all of your old-fashioned expenses or use an app to track your spending, but the most important thing is to determine exactly where all your money goes. Then cut out any costs that aren't really necessary (or at least try to cut down). For example, if you absolutely love to eat out, you don't have to eliminate it altogether – but try cutting down so you don't spend as much as you are now.

Even though you can only save an additional $ 100 a month by cutting out the little things you save money on, that money can go further than you think when you invest it in the Pension Fund. By saving just $ 100 a month, earning a 7% annual return on your investment, you can collect around $ 113,000 in savings over 30 years.

3. Spending extra money just because you have it

When you get a bonus at work or receive your tax refund, the first thing you might want to do is splurge on a nice vacation or the expensive new phone you don't need but really want . While there is no harm in treating yourself once, make sure you do not spend at the expense of your financial future.

When saving for retirement, you can tell that you will save more when you start making more money. But then when you start making more money, you can convince yourself that you need to spend more because you deserve it as a reward for your hard work. As the income increases, it is easy to fall into the trap of spending more because you have more to spend.

A quarter of US households earning $ 150,000 or more per year live a paycheck on a paycheck, according to a Nielsen Global Consumer Insight Survey, which shows that money doesn't necessarily solve all your financial problems. If you don't spend your money wisely, you can end up spending more than you can afford, not leaving anything for your pension fund.

Storage for retirement is not easy, no matter how much money you have. But if you unknowingly waste money on things you don't need, these bad habits can end up costing you thousands of dollars in lost potential. But when you are aware of the problem and begin to take steps to correct it, you will be in a much healthier financial position.


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