5 Bad Financial Habits to Abandon in 2022

Last time, we talked about good financial habits you should start to build in order to have financial success. Today, to complete the picture, we’ve compiled a list of 5 bad financial habits that you need to avoid. Continue reading for useful tips and advice.

1. Shopping to boost your mood

Have you ever bought something you didn’t need just to make yourself happy? Raise your hand if you have. This action is often known as “retail therapy,” an effective stress reliever that many people use consciously or unconsciously to lift their mood when they’re feeling low. According to a 2011 study that looked at 407 adults in three different experiments, shopping positively affects one’s emotions. 

Unfortunately, if you consistently use shopping to cope with distress, it will become a habit. According to Ryan T. Howell, an assistant professor of psychology at San Francisco State University, buying repetitively can lead to continued spending despite “harmful emotional, social, and financial effects.”

As a result, the more often you shop after a stressful day, the more likely you are to shop again. Shopping to lift your mood in the short term establishes a relationship between happiness and material possessions. It’s also a link that might be difficult to break and will cause harm to your finances. 

A popular solution for pushing emotional spending to the curb is giving yourself a waiting time. For example, if you wait at least 48 hours before making any non-essential purchases, the desire to buy will usually fade after the joy of the moment has worn off. Or you can host a clothing or item share event with friends, and select items amongst a variety of things to satiate your browsing and selecting urge. Then, you trade items for free.

2. Spending on convenience

We all have some financial habits that make life easier, whether it’s picking up a cup of coffee on the way to work or a fast food dinner on the way home. A convenience buy might be a nice treat now and then, especially when you’re in a hurry. However, if you make convenience purchases regularly, the convenience will cost you.

Consider ditching a coffee on your way to work every morning by getting up 5 minutes earlier a few times a week to brew a cup at home. Similarly, instead of buying a fast food dinner, you could learn to make a few simple meals and enjoy them throughout the week. Small tweaks like these can add up to hundreds of dollars over a year. 

3. Using credit cards for points

A rewards credit card allows you to collect points on your purchases and redeem them for gifts or discounts later. Who doesn’t love this? But there’s a reason credit card companies offer those rewards, and it’s not out of generosity. Rewards encourage you to spend more.

However, credit card rewards are typically less rewarding than you think unless you use them wisely. For example, you usually can only score a little cashback on your purchases because many cards impose heavy restrictions. Besides, some credit cards have annual reward limits or restrict the highest cashback rates to specific expenditures (such as gas and grocery).

Chasing credit card points will eventually lead you to go deep into debt. Therefore, you should consider getting rid of this bad habit. 

4. Having no long-term plan for your debt

It can be scary to think about the money you owe, so some people try to ignore their debts. No one ever enjoys thinking about their debt. However, if you aren’t thinking about it, chances are you won’t be able to keep track of it. This behavior will cause you more late fees and interest charges, plunging you even deeper into debt.

Though debt seems intimidating, it doesn’t necessarily mean that there is no way you can tackle this issue. Keeping track of your debt is a great approach to get started on paying it off. To stay on top of things, create files for all of your receipts, bank statements, loans, and bills. There are several apps that can help you stay on top of what you owe and put you in the mindset to pay it off faster.

Shoeboxed is a receipt scanning and expense tracking app that allows you to scan your receipts and other documents and store them in the cloud. With Shoeboxed, you’ll have the big picture of your finances, including your spending and your debts. Shoeboxed empowers you to manage your finance more efficiently!

5. Not saving any money

Saving money seems to be an impossible mission for many. But if you can manage to set aside some money for the future, even a little bit, it pays off big time in the long run. It may sound paradoxical, but even if you’re in debt, you should get into the good habit of saving.

Saving provides you financial security. For example, if you have money set up for emergencies, you’ll be prepared if something unexpected occurs. In addition, saving allows you to take risks and invest for the future. 

It’s entirely up to you how much money you should set aside for yourself first. It’s great to have ambitious goals, but it’s also important not to overwork yourself. Start by creating a budget that includes only the absolute necessities (such as rent, utilities, and groceries), and then decide how much of the remaining money you want to save each month. Don’t forget to treat yourself sometimes!

The bottom line

We all have habits that we frequently engage in, whether it’s a daily fast food meal or occasional shopping. Those can seem harmless, but think about how they’ll affect your bottom line. Even small purchases of $1 or $5 build up over time. Therefore, recognizing and adjusting these bad financial habits can help you build more sustainable finances.

If you’re interested in entrepreneurship stories, business tips, or productivity tools, find more posts like this on the Shoeboxed Blog. Shoeboxed is a cloud-based software that helps individuals and businesses turn their massive paper receipts into digital data. With Shoeboxed, you can accomplish a variety of tasks: scan, store and organize receipts, manage expenses, store business cards and even track mileage for business travelers. It’s simple to install and easy to use. Give Shoeboxed a try today!

Maximizing 2016 Tax Deductions: Tips & Tools for Millennial Freelancers

The earlier you organize expenses and keep track of potential deductions, the more money you’ll save in the long run.

Millennial freelancers are a force to be reckoned with and the numbers are there to prove it. According to a national survey from Freelancers Union and Upwork (formerly oDesk), 38% of millennials are freelancing — more than any other generation. Considering that they now make up 45% of entire workforce, this group of 20 and 30-somethings is taking the freelancing industry by storm.

It’s clear to see why. The benefits of being a freelancer align with the lifestyle that millennials seek. They want flexibility, independence and creativity – a perfect formula for a rise in freelancing jobs. But while there are many perks to being a freelancer, there are also stodgy downsides such as complicated taxes and the responsibility of tedious administrative tasks.

Luckily, there are ways to overcome these drawbacks. Tax season may be months away, but that doesn’t mean millennial freelancers can’t start prepping now. The earlier you organize expenses and understand tricks and tips to maximize deductions to make tax season a breeze, the more money you’ll save in the long run. Start sooner rather than later with these recommended tools and tricks:

Research Deductions in the Freelancers Union Tax Blog
One thing freelancers shouldn’t complain to the IRS about is the amount of tax breaks they offer. Tax breaks give freelancers a valuable opportunity to win back money they’ve been spending on their business. It’s also a unique way to encourage entrepreneurship. There’s only one problem: it’s hard to keep track of what’s what, and deductions often change on a yearly basis.

Learn about which expenses qualify for which tax break by reading the in-depth tax blog written by the awesome folks at Freelancers Union. Freelancers Union is a nonprofit organization and insurance company that advocates for the rights of freelancers. Their blog posts are written by freelance veterans and include everything from how to calculate hourly rates to how to write client contracts.

Freelancers Union Shoeboxed

Don’t procrastinate! Use IFTTT for Important Date Reminders
Unless you want to have a very stressful week, don’t wait until right before April 15 to prep and file your taxes! When you take your time to carefully approach filing your taxes, it won’t seem as stressful or time consuming. You’re more likely to make an error or miss out on a deduction if you rush the process.

Eliminate the risk of filing late by using IFTTT. Simply set a receipe that sends a email and/or text reminders on certain dates leading up to the April 15 deadline. This nifty web tool can also help with QET deadline reminders.

IFTTT Shoeboxed

When in doubt, ask for help using sites like NerdWallet
With an endless supply of information, the Internet of things can answer any question you may have related to taxes. Sometimes though, having 10+ pages pulled up with an overwhelming amount of information can make material difficult to comprehend (which is especially true for taxes). Depending on the complexity of your question, it may be best to approach a tax expert or CPA. Tax deductions change often — stay ahead of the curve and make sure you’re taking advantage of ways to save money by asking for help.

Enter NerdWallet, an educational blog that helps millennials make smarter financial decisions by breaking down complex financial information into simple terms. The writers at NerdWallet can tell you exactly which expenses qualify for which tax break as you track your finances into tax season. They also have on-demand financial professionals available to answer your tax questions directly from their homepage.

NerdWallet Shoeboxed Freelance

Organize Your Receipts and Expenses by Tax Category with Shoeboxed
One of the easiest way for freelancers to maximize tax deductions is by staying organized and keeping updated records of receipts, payments and expenses. The IRS demands documented proof for claims, so having everything stored and accessible can reduce a substantial amount of time and pressure. Organization also helps maximize deductions and reimbursements without the hassle of scrambling to find misplaced financial records.

Apps like Shoeboxed let on-the-go freelancers snap pictures of receipts using their phone, which are then digitally stored as IRS-accepted images. Receipts are processed and organized so that vendor, total amount, date, tax category and payment type are extracted and available in a searchable online account. Simply make a note that the receipt is deductible and boom – you have a digital archive of everything you can write off for taxes.

Shoeboxed Freelancers

Use these tools and tips to help make your freelance tax season the smoothest (and most time-saving) yet!