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4 Major Financial Sins I Commit Regularly, & How I’m Changing My Ways

We all have something that we could improve, so in honor of the New Year, it’s time to come clean. There are some token pieces of personal finance advice that I just don’t follow, or maybe “loosely attempt at best.” I know I already talked about taking a step down in pay, but there are a few other classic no-no’s that I’m guilty of. Oh, and don’t worry — I’m not going to bombard you with the classic $5 latte lament or avocado toast rant. I may not be above it, but I know you might be!

So, where do I fall short, time and time again?

1. My worst offender: I don’t stick to a budget. 

Seriously.

Every month I religiously use Mint and Personal Capital to see where my money goes, but I don’t actually have strict ceilings for my repeat-offender categories. Outside of my fixed big-ticket items (mortgage, HOA, insurance), I have loose buckets that get changed just about every week. Sure, I know that I’ll generally spend about $30 on gas every month, $150 on groceries, and maybe $60 eating out. But things like Amazon-ing the shit out of my household supplies or skincare? It all kind of falls into “other.”

That said, I do stick to my savings goal every month: 50% of my takehome pay. I handle my spending in reverse, in a way, because I know I only have $X to spend in a month, and while I can buy anything, I can’t buy everything. If I get tickets to the circus, I’ll cut back on eating out. If I need a haircut, I won’t buy more whiskey.

As I get close to 50% of my takehome pay, I stop spending. I do keep tabs on where my money’s going and how much of a balance I have left that month, and will make decisions based on what’s left. To be honest, I’m usually pretty frugal anyway, outside of my mortgage, and will sometimes even be able to hit the next “pretty number” goal: another $100 or so towards my investment accounts.

2. I overuse Amazon like a mo-fo.

Dammit, Jeff Bezos! It’s so, so easy to hop on to the Amazon app and order whatever it is that I feel needs to be replaced now. There are several problems with this:

  1. It’s so easy to overspend.
  2. I’m not supporting local businesses.
  3. Subscribe & Save, while great when you hit 15% off for bulk items you need anyway, will just ship willy-nilly if you’re not paying attention.

Just last night I realized I was running low on Q-Tips, and immediately went to Amazon to replace them with the lowest PPQ (price-per-Q-Tip) option. Meanwhile, the last Q-Tip bulk purchase still had two boxes to go, sitting just a few feet away in the hall.

Come on, self! You’re better than this!

While this year I had a blast DIY-ing most of my holiday gifts, it was Amazon that provided the trappings. I could have easily just found someone local who sells cute things, but I gave a portion of my purchase to Bezos out of sheer ease-of-use laziness. Honestly, if it’s not an entertainment, travel, or fixed expense, Amazon is always my go-to. This needs to change. No wonder Bezos hit a net worth of 100 BILLION DOLLARS (albeit briefly).

3. I don’t max out my 401(K).

Okay, there’s a whole rant brewing over this one. I’ll hold off for now, though, and simply say that I’m not taking full advantage of my 401(K) at work. Conventional wisdom tells us to at least get the full employer match, and in my defense, I totally nailed that part.

However, 401(K)s allow us to tax shelter an unrivaled $18,000 per year, either as a Traditional (pay taxes when you retire, not now) or Roth (pay taxes now, but not at retirement) investment. Yes, you can get that same tax protection from your IRA — which I totally am doing, but the annual contribution limit is $5,500.

That’s a hefty difference in taxable income, no matter when you pay it.

Meanwhile, I’m investing in taxable brokerage accounts from M1 and Robinhood, so I’m not only taxed on the money I’m putting in but also on the gains I’ll (hopefully) pull out when the time comes. To be honest, I have my reasons. There are some things about 401(K)s in general that I sincerely do not like:

  • Limited options for how to invest my money
  • Fees on fees on fees
  • Restrictions on when or how to use that money

But is it enough of a reason to forego the tax benefits? Probably not. I have to tighten this up pronto.

4. I no longer automate my savings.

This is another classic duh piece of advice. Everyone and their mother knows that if you want to stick to your savings plan, you should take the chance for human error out of the equation. This usually means that if you know you’re going to get paid on X date, you should have an automatic transfer set up for that same week. This way, that money doesn’t sit in your account, tricking you into thinking you can buy luxurious non-essentials.

I used to have automatic transfers set up, but I removed them a few months ago when I got my (wonderful) new job. My new pay schedule is every other Friday, rather than twice a month. I could say “oh, the dates don’t make sense, so screw the recurring transfer,” but honestly, I’ve even stopped manually transferring the cash into my high-yield Barclays savings account.

Cardinal rule, broken. But hey, I’m still saving! Thanks to my favorite personal finance tools, I’m looking at a shaved-off portion of my income each month anyway. Everything else is earmarked as “savings,” whether it’s in the right account or not. The truth is I’m very lucky to have a work perk I’d never heard of: an even higher-yield checking account, that gives me 8% interest compounded monthly. The catch is I can only make deposits four times a year, so rather than transferring my savings monthly, I’m doing it quarterly now.

The smarter way to do this would be to still use my high-yield savings account, earn the 1.15%+ interest on it for three months, then transfer it to my work account. I’ll get it together. Promise.

*****

So I have plenty of room to grow and space to tighten up, financially. I’m comfortable with not using a strict budget, but I need to make some updates to my habits:

  1. Stop donating to the Line-Jeff-Bezos’-Pockets Fund
  2. Figure out how to best allocate my retirement savings (to 401K or not to 401K, that is the question)
  3. Maximize the savings accounts I’m using (done!)

I’m not a big New Years Resolutions girl, but these are easy enough to remedy with a little effort or research. I’ll share what I find as time goes on, and I hope to hear your suggestions!

In the meantime, Happy New Year!

Tis is a 20-something recruiter, startup enthusiast, finance blogger, and proud feminist-slash-crazy cat lady. Find her on Twitter or check out the blog for lifehacks and musings on personal finance, professional growth, and enjoying the journey to early retirement.

Image via Unsplash

  • One of my financial goals right now is to automate my savings again! I stopped when my new employer wouldn’t allow me to split my direct deposit into two accounts, but now my NEW new employer does… it’s just taken me a year & a half to actually do it!

    Also, I somehow missed the memo on the Roth 401(K)… going to have to research that one now!

    • I hear you. Also, reach out if you have questions about Roth vs. Traditional on that 401K. I geek out over this stuff nonstop!

  • My budgeting style sounds like yours lol. I’m sure about what I save but I have a lot of “other” categories too. I plan to sit down and iron it out this week. Thanks for sharing!

  • Lauren

    A lot of those budgeting tools that automatically categorize your purchases are honestly terrible at deciding what goes in what category. After a few months of trying to train the service I was using to recognize and accurately sort common purchases (it was a tool offered in my online banking, and it kept sorting the odd beer and pretzel at my local watering hole as “Auto & Transport”), I gave up because I did not have time for that.

    I’d be interested to hear more about this high-yield savings account though!

    • Unfortunately a lot of these budgeting tools don’t have AI strong enough to catch simple recurring errors like that… very frustrating. I like Mint because you can set the same vendor under a category, or apply rules to it. Even though it’s manual to do it once, there’s no more frustration from then on.

      As for the savings account, I use Barclays: https://www.banking.barclaysus.com/online-savings.html
      They keep raising the rate, which I love, and I don’t have to do a thing to get the new rate. When I opened my account, it was 1.15% APY. Now it’s jumped to 1.3%. Literally 10x better than the Wells Fargo account I was using before!