The small things you’re doing that are killing your finances

Your finances don’t crumble overnight. It’s rarely just one “mistake” that renders you broke or financially stressed. It’s usually the accumulation of small, seemingly harmless habits that stack on top of each other and erode your finances over time.

Think about it; you’re walking to work and grab a pumpkin spice latte for $10, then at lunch you click on the “buy now” button for something that was still in your cart from a few days back (it was on sale so you just had to get it). Later on, you stream shows on just one platform, but are still paying for three, then you order takeout when you’ve got food at home because you’re tired.

None of these actions, in isolation, would crater your financial future, but taken together they could add up to hundreds of dollars a month, which could have gone toward your retirement, and maybe even made you a millionaire at some point.

Here’s a roll-up of the most pesky habits that fly under most peoples’ money awareness radar, and could be ruining your finances, and how to break them. 

Subscription creep

Gym memberships, weight-loss coaching, streaming services, apps and so on are individually cheap, but collectively a budget drain. Most of us forget we even have them because the costs are super small. 

Break subscription creep with a monthly audit where you review your bank and credit card statements and cancel what you haven’t used in 30 days. This is also a great way to bundle smartly such as shifting multiple core subscriptions to a family plan. Or, cancel most, then rotate them. Picking one or two at a time, then switching, can also keep things interesting.

Ignoring small fees

These are things like annual credit card fees, overdraft charges, late fees, ATM fees, yoga mat rentals etc. They all seem minor but dig into your cash flow. 

Break this habit by switching to no-fee accounts, scheduling payments and automating bills so you’re never late, and set up balance alerts from your bank so you know when your balances are running low ... and bring your own yoga mat! 

Meals, drinks and coffees out

I get that this is how a lot of folks stay in touch with friends and family. But too much takeout, especially of the fancier kind, can ruin your wallet (literally rivalling a monthly car payment).

To break this habit, it can help to apply a bit of reverse psychology. It’s OK to treat yourself to something “special” once a week, and set a limit to something you can actually afford, say $10 to $20 toward whatever food/beverage you want that week. But for the rest of the time, think about meal planning (personally I use ChatGPT to spit out a healthy family-friendly plan for the week, then I ask it for a shopping list). Some people also like to do meal prepping, bulk preparing lunches for the work week, as an example. Have friends over for a potluck, or meet them for a drip coffee versus at a sushi restaurant.

If you stop “ingesting” the money that would otherwise have been savings, you can sock away that difference into investments. Investing $50 a week at a seven per cent rate of return for 40 years, as an example, would add up to nearly $600,000. I’ll bet your $18 salad doesn’t taste that good after reading that number.

Not paying off your credit card … especially if you have the money

Of course, minimum payments feel manageable, but interest snowballs, trapping you in debt. The rates on unpaid balances are generally north of 20 per cent, and compounded daily — yikes!

If you’ve got the cash flow, pay off your credit cards on time and in full each month. It’s nonsensical not to do so. If it makes you mad to see your account balance drop, take it as a cue that you need to save more, and set that money aside for a rainy day so you won’t dip into it.

If you can’t clear them up, and can’t consolidate to a lower-cost loan or line of credit, try these debt-crushing techniques:

• Round up payments. Even an extra $20 per week can drastically cut interest. Treat this “extra” as a non-negotiable bill, and automate it.

• Use the snowball or avalanche method. Tackle smaller balances first (snowball) or the highest interest rates (avalanche).

‘Retail therapy’ for stress reduction

It doesn’t work. Shopping as a mood booster can create guilt and financial strain. It can also trigger further impulse purchasing habits. The real solution to breaking this habit is understanding what’s happening with your emotions. If you’re triggered to shop, there’s something else going on. Pause and reflect on what’s happening for you. Then try a walk, some exercise, drinking water, journaling, calling a friend; all of these actions are healthy and can deliver relief from anxiety. It’s also helpful to build a little bit of fun money into your budget, which helps reduce impulsive buying, and puts a smile on your face.

Take things a step further by inserting the 24-hour rule. If you want to buy something non-essential, wait a day. Often, the urge will fade. And unsubscribe from marketing materials, emails with promos, etc. 

If you find yourself saying things like “I’m worth it” but you’re broke, or “it’s just a small amount of money and won’t matter” and you can’t sleep at night, this is your nudge that it’s time to sink into financial awareness and rebuild your foundation with better money habits.

This article was originally published in The Star. Lesley-Anne Scorgie is a Toronto-based personal finance columnist and a freelance contributing columnist for the Star.