CNNFN: Bad money habits that are hurting your savings: Thursday October 01, 2015

By Kathryn Vasel @KathrynVasel

not rich

It’s no secret that spending more than you earn is bad for your budget. But
there are some not-so-obvious habits that can lead your finances astray.

“The easiest way to becoming a millionaire for most people besides
discipline is automation, priorities and goal setting,” said Cary
Carbonaro, a certified financial planner and managing director at
United Capital.

Here are financial habits that money experts said can hurt your
long-term savings:

Saving only what’s left over

If your savings plan is socking away whatever money is left over at the
end of the month, it’s time to prioritize your budget.

“When you get your paycheck, have a certain amount that goes into a
savings or investing account … you never see it,” said Ted Peters,
CEO of Bluestone Financial Institutions Fund.

When creating a budget, Peters recommends starting with your savings
target. “Set your savings percent for around 7-10% … and then work
out the rest and determine your priorities”

Setting and forgetting

Your savings rate should increase throughout your career.

When you get a pay raise, your savings rate should also get bumped up,
advised Neil Krishnaswamy, a certified financial planner at Exencial
Wealth Advisors in Texas.

Not reviewing your retirement accounts can also be costly. Carbonaro
suggested evaluating your plan at least once a year to make sure you’re
well balanced.

Spending too much on housing

Mortgage and rental payments are often the biggest budget eaters, but
they should be less than 28% of your gross income, advised Carbonaro,
and that includes principle, interest, taxes and insurance.

Not taking full advantage of tax benefits at work

Don’t give more to Uncle Sam than you have to.

“Reduce your top-line income in a meaningful way,” said Krishnaswamy.
Some companies offer tax-advantaged benefits, like 401(k)s, health
savings accounts and commuter funds that use pre-tax dollars.

Being too conservative when investing

Wall Street’s gyrations aren’t for the faint of heart, but it’s
important to have the right risk exposure for your age.

“If you are 40 or younger, you should be 100% in equities,” said
Peters.

Impulse shopping

When it comes to making major purchases, patience is a virtue.

“If you want to make a big purchase, wait a day, sleep on it and see if
you really need it the next day,” said Carbonaro, “99% of the time you
don’t.”

Paying too many bank fees

Bank account fees aren’t going to make or break your budget — unless
they keep happening. Make sure you understand the terms of your
accounts to avoid getting hit with hard.

Carbonaro said she had one client who was bouncing a check twice a
month because the line of credit wasn’t tied to the checking account.
“Overdraft fees can be expensive. If you do two a month, that could be
$840 a year.”

CNNMoney (New York) October 1, 2015: 11:43 AM ET